Compound Interest — by Principal and Investment Term

See exactly how much different starting amounts turn into over different horizons at realistic real-world rates.

By · Updated · Methodology

Why compound interest is called the eighth wonder

Compounding means earning interest on your interest. Over short horizons it looks almost linear — five years at 5% is roughly 28% total growth. But over 30 years at the same rate, the same pound multiplies 4.3× rather than 2.5×. The difference is entirely the non-linear tail.

The practical implication: time in the market dwarfs timing it. Starting 10 years earlier with the same contributions typically produces a larger ending balance than doubling your contribution rate for the final 10 years.

Pick a starting amount

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£1,000 for 20 years

Grows to £2,653.30 at 5% annual return — see full breakdown and rate comparisons.

Compound Interest
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£2,500 for 20 years

Grows to £6,633.24 at 5% annual return — see full breakdown and rate comparisons.

Compound Interest
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£5,000 for 20 years

Grows to £13,266.49 at 5% annual return — see full breakdown and rate comparisons.

Compound Interest
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£10,000 for 20 years

Grows to £26,532.98 at 5% annual return — see full breakdown and rate comparisons.

Compound Interest
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£25,000 for 20 years

Grows to £66,332.44 at 5% annual return — see full breakdown and rate comparisons.

Compound Interest
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£50,000 for 20 years

Grows to £132,664.89 at 5% annual return — see full breakdown and rate comparisons.

Compound Interest
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£100,000 for 20 years

Grows to £265,329.77 at 5% annual return — see full breakdown and rate comparisons.

Compound Interest

Rates that are actually realistic

  • 2–3% — cash savings, fixed-rate bonds, gilt yields in a low-rate environment.
  • 4–5% — cash savings in a higher-rate environment, government bonds.
  • 5–7% — typical long-run real (inflation-adjusted) return of a diversified global stock portfolio.
  • 8–10% — typical long-run nominal return of global stocks before inflation. Not guaranteed.

Whenever you see a "10% return" claim, check whether it's real or nominal — a 3% inflation assumption is the difference between £100 being worth £100 in 30 years and being worth around £41.

Shelter everything you can

In the UK, a Stocks & Shares ISA shelters all capital gains and dividends from tax. A SIPP (self-invested personal pension) gets tax relief on the way in and is taxed on withdrawal, making it especially efficient for higher-rate taxpayers. Using these wrappers before any unwrapped investing is almost always the right move.