BuyMeWhiskey

Compound interest and savings calculator

Updated

Enter a starting amount, a monthly contribution, the annual interest rate and how often it compounds. The table shows how much of the final balance is your money and how much is interest.

How it works

Compounding means you earn interest on previous interest. The longer money is left and the more often interest is added, the bigger the effect. Regular contributions often matter more than the rate in the early years.

Savings rates change, and investment returns are not guaranteed. Use a cautious rate and remember inflation reduces what the final balance will buy.

The formula

Lump sum: FV = P(1 + r/k)k·t, where k is compounding periods per year. With monthly deposits D, the calculator converts the rate to an effective monthly rate m = (1 + r/k)k/12 − 1 and adds deposits at the end of each month: FV = P(1+m)12t + D·((1+m)12t − 1)/m.

Worked example

£10,000 at 5% compounded yearly for 10 years grows to £16,288.95. Saving £100 a month at 6% compounded monthly for 10 years builds £16,387.93, of which £12,000 is your deposits and £4,387.93 is interest.

Frequently asked questions

What is the difference between AER and the advertised rate?

AER (or APY in the US) shows the yearly return including compounding. If you enter an AER, set compounding to yearly to avoid double-counting.

Does this include tax on interest?

No. Interest may be taxable depending on your country, allowances and account type, such as an ISA in the UK or an IRA in the US.

Can I use it for investments?

You can use an assumed average return, but investment returns vary year to year and can be negative. The result is an illustration, not a forecast.

More calculators

General information, not personal financial advice. Results are estimates based on the inputs and assumptions shown.