Compound Interest Calculator

Einstein's Eighth Wonder

Compound interest is the engine of long-term wealth. When you invest money, you earn a return. When you reinvest that return, you earn a return on your return. Over time, the growth snowballs: the longer you leave it, the faster it grows. Albert Einstein allegedly called compound interest "the eighth wonder of the world" — and whether or not he actually said it, the principle is sound. Start early, and time does the heavy lifting.

This calculator shows you the numbers. Enter a lump sum, a monthly contribution, a time horizon, and an expected growth rate. The calculator projects the final value, the total amount you contributed, and the investment growth (the difference). It also shows the inflation-adjusted value — what the final amount is worth in today's money, after accounting for rising prices. This is the number that matters for real-world planning.

The Time Value of Money

The single most important variable in compound growth is time. £10,000 invested at 5% for 40 years grows to £70,400. The same £10,000 at 5% for 20 years grows to only £26,533. The extra 20 years nearly triple the final value — and you didn't add a penny more. This is why financial advisers stress starting early: a 25-year-old who invests £200/month until age 65 will have more than a 35-year-old who invests £400/month for the same period. Time beats money.

Real Returns vs Nominal Returns

A 5% nominal return with 2.5% inflation gives a 2.5% real return. Over 30 years, £10,000 at 5% nominal grows to £43,219 — but in today's money, that's only £20,646. The inflation-adjusted figure is what you can actually buy with the money. Always look at real returns when planning for long-term goals.

Related Tools

• ISA Calculator — tax-free compound growth.
• Pension Calculator — compound growth with tax relief.