Compound Interest & FIRE Calculator
Project what regular investing becomes over decades, with contributions and investment growth drawn as separate layers so you can see the year one overtakes the other. Switch to real terms to strip out inflation and read every future balance in today’s purchasing power, and set a withdrawal rate to find your financial independence number.
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Interactive compound interest
Your plan
Input DataContributions and growth
Results & OutputStacked, in future pounds
Financial independence
Parameters & SettingsAnnual spending divided by your withdrawal rate
Year by year
Results & Output| Year | Contributed | Growth | Balance |
|---|---|---|---|
| Year 0 | £10,000 | £0 | £10,000 |
| Year 1 | £16,000 | £919 | £16,919 |
| Year 2 | £22,000 | £2,339 | £24,339 |
| Year 3 | £28,000 | £4,294 | £32,294 |
| Year 4 | £34,000 | £6,825 | £40,825 |
| Year 5 | £40,000 | £9,973 | £49,973 |
| Year 6 | £46,000 | £13,782 | £59,782 |
| Year 7 | £52,000 | £18,299 | £70,299 |
| Year 8 | £58,000 | £23,578 | £81,578 |
| Year 9 | £64,000 | £29,671 | £93,671 |
| Year 10 | £70,000 | £36,639 | £106,639 |
| Year 11 | £76,000 | £44,544 | £120,544 |
| Year 12 | £82,000 | £53,455 | £135,455 |
| Year 13 | £88,000 | £63,443 | £151,443 |
| Year 14 | £94,000 | £74,587 | £168,587 |
| Year 15 | £100,000 | £86,971 | £186,971 |
| Year 16 | £106,000 | £100,683 | £206,683 |
| Year 17 | £112,000 | £115,820 | £227,820 |
| Year 18 | £118,000 | £132,486 | £250,486 |
| Year 19 | £124,000 | £150,790 | £274,790 |
| Year 20 | £130,000 | £170,851 | £300,851 |
| Year 21 | £136,000 | £192,796 | £328,796 |
| Year 22 | £142,000 | £216,760 | £358,760 |
| Year 23 | £148,000 | £242,892 | £390,892 |
| Year 24 | £154,000 | £271,345 | £425,345 |
How much will £500 a month grow to?
£500 a month for 30 years at a 7% annual return grows to roughly £610,000, of which £180,000 is money you paid in. Growth overtakes total contributions somewhere around year 15 to 17 on those assumptions — which is why starting earlier generally beats saving more later.
How to use the compound interest
- Set the starting point: Enter your initial balance and what you contribute each month.
- Choose return and horizon: Pick an expected annual return, the number of years, and compounding frequency.
- Adjust for inflation: Toggle real terms to see the balance in today money instead of future pounds.
- Find the crossover: The chart marks the year growth first exceeds the money you put in.
How the compound interest works
How compounding is computed
With a lump sum only, the future value is FV = P(1 + r/n)^(nt). Regular contributions add an annuity term, but rather than use a closed form the tool simulates month by month — which keeps contribution timing, changing compounding frequency and inflation adjustment all exact and consistent.
Nominal, real and the inflation adjustment
Real balances divide the nominal balance by (1 + i)^t. Note that this is not the same as subtracting inflation from the return: a 7% return with 2.5% inflation is a real return of 1.07/1.025 − 1 ≈ 4.39%, not 4.5%. The difference looks trivial and compounds to a great deal over thirty years.
The two curves that matter
The chart separates what you paid in from what the market added. Early on the contribution line dominates and the growth line looks almost flat — this is the discouraging phase that causes people to stop. Growth is exponential while contributions are linear, so the lines must eventually cross, and after they do the gap widens quickly.
What this model leaves out
Sequence-of-returns risk above all: a constant return is a smooth curve, while real markets deliver the same average through crashes and rallies, and the order matters enormously once you start withdrawing. Fees, taxes on gains and contribution increases with salary are also outside the model.
Compound Interest — frequently asked questions
Long-run global equity returns have historically averaged roughly 7% nominal before fees, but with enormous variance and long flat stretches. A projection is a planning tool, not a forecast: run an optimistic and a pessimistic case and see whether your plan survives the pessimistic one.
It deflates every future balance by your inflation assumption, so the figure is expressed in the purchasing power of today. A 1m balance in 30 years at 2.5% inflation is about 477,000 in today money — the same number, a very different retirement.
The month when cumulative investment growth first exceeds cumulative contributions. It is the moment the portfolio starts doing more work than you do, and for typical assumptions it arrives somewhere between year 12 and year 18 — which is precisely why starting early dominates saving more.
The FIRE target shown is your annual spending divided by your withdrawal rate — 4% implies 25x annual spending. It originates in the Trinity study of historical US portfolios and assumes a 30-year horizon and a stock-heavy allocation; longer retirements or lower expected returns argue for 3-3.5%.
Official resources & government references
Verified references, primary standards specifications, and official publications governing the rules and calculations implemented in this tool:
Official Compound Interest Calculator & Investor Guide
US Securities and Exchange Commission guide to compounding mechanics, investment fees, and asset allocation.
Investing Basics & Long-Term Savings Guidance
Independent guidance on investment risk, index tracker funds, and tax-sheltered ISAs and pensions.
Historical UK Inflation & Purchasing Power Calculator
Official CPI and RPI historical inflation records for assessing real versus nominal portfolio returns.
Important Disclaimer
Investment projections assume a steady, annualized rate of return and constant inflation. Real asset markets fluctuate with volatility, dividend taxation, and sequence-of-returns risk during drawdown phases. Projections do not guarantee future investment performance or constitute financial advice.