Compound growth means each period’s return is added to the balance, so later returns are calculated on both the original money and earlier growth. Regular contributions can matter as much as the assumed rate because they steadily enlarge the balance.
The calculator separates money contributed from estimated growth. This is important because an illustrated return is not guaranteed, particularly when it represents investment growth rather than a fixed savings rate.
How the compound-interest estimate works
The annual rate is divided into twelve monthly periods. The starting balance compounds each month, and each regular contribution is added at the end of the month. A zero rate is handled as simple addition, so the result still works when you want to compare contributions without assumed growth.
The chart shows the projected balance beside the total contributed. The gap between those lines is the estimated compound growth under the assumptions entered.
Assumptions and limitations
- The annual rate stays constant for the entire period.
- Growth compounds monthly and contributions arrive at month-end.
- There are no withdrawals, missed contributions, fees, taxes, or product limits.
- The rate is entered as a smooth annual percentage, not a sequence of changing market returns.
- The inflation figure is used only to show an approximate future balance in today’s spending power.
Real savings rates can change. Investment returns fluctuate and can be negative; the FCA stresses that risk and return are connected. Use several conservative scenarios rather than treating one rate as a forecast.
£5,000 plus £250 a month for ten years
With a £5,000 starting amount, £250 contributed at each month-end, and a constant annual rate of 5% compounded monthly, the calculator estimates a balance of about £47,056 after ten years.
This is a mathematical illustration, not a promised outcome. Trying 3%, 5%, and 7% can show how sensitive the result is to the rate assumption. Also test a lower monthly contribution to see whether the plan remains realistic.
Why the inflation result is separate
A future currency amount and its buying power are not the same. MoneyHelper explains that inflation reduces what savings can buy over time. The calculator discounts the projected balance using the inflation percentage entered to give an approximate value in today’s money.
Inflation will not remain constant, so this is context rather than a prediction. It can still help prevent a large future number from looking more reassuring than it really is.
Compound interest questions
Does the calculator assume contributions at the beginning or end of each month?
It assumes end-of-month contributions. Depositing at the beginning would produce a slightly higher estimate because each contribution compounds for one additional month.
Can I use it for investments?
You can explore scenarios, but a smooth rate does not represent real market volatility, fees, taxes, or the possibility of loss. Review the FCA’s guidance on risk and returns.
Why include inflation?
Inflation helps translate the projected balance into approximate present-day spending power. See MoneyHelper’s explanation of inflation and savings.
What rate should I enter?
Use a rate that matches the scenario and product you are examining, then test lower and higher assumptions. Do not use a historical average as a guarantee of future performance.
For a specific target rather than open-ended growth, use the savings goal calculator.