Is this before or after tax?

This is the gross return. In an ISA or 401(k)-style tax-advantaged account, growth is tax-free. In a taxable account, deduct dividend and capital-gains tax as it applies to you.

Does it account for inflation?

No — this shows nominal balance. To see real (inflation-adjusted) growth, subtract expected inflation from the annual return before entering it.

Are contributions made at the start or end of the month?

End of the month, immediately after that month's interest is applied. This is the standard convention for a savings simulation.

Compound Interest Calculator

See how initial deposits, regular contributions and compounding grow into a final balance.

Your details

Initial deposit

Monthly contribution

Expected annual return

Years

Compounding frequency

Final balance

£132,061

after 20 years

Total contributions

£65,000

Interest earned

£67,061

Balance growth

How this is calculated

Compound interest earns interest on interest. Each period, the interest is added to the balance, so the next period's interest is calculated on a larger amount. Over long time horizons, this snowballs into dramatic growth.

The formula for a single lump sum is A = P(1 + r/n)^(nt), where P is the principal, r is the annual rate, n is the compounding frequency per year, and t is the number of years. With regular monthly contributions we simulate month by month for accuracy.

More frequent compounding produces a slightly higher return, but the difference between monthly and daily compounding is small compared with the rate itself and the length of time invested.