Institute for Investment

Compound Interest Calculator

See how your money grows over time. This tool accounts for initial deposits, regular monthly contributions, expected annual growth rates, and the silent wealth-killer: annual platform fees.

Assuming contributions at start of month
1 Year 50 Years
Global equities historical avg: ~7% real
Combined broker + fund OCF
Total Value
Total Contributions
Lost to Fees

The Math Behind the Magic

Compound interest is often called the eighth wonder of the world. It occurs when the interest you earn on your initial investment begins to earn interest on itself. Over long time horizons, this snowball effect becomes the primary engine of wealth creation.

Formula Explained

Our calculator uses a standard future value of an annuity formula, modified to account for ongoing percentage fees stripped from the portfolio balance annually.

FV = P * (1 + (r - f))^t + [PMT * (((1 + (r - f))^t - 1) / (r - f))]

Where:
P = Initial Principal
r = Annual Rate of Return
f = Annual Fee Rate
t = Years
PMT = Annual Contributions

Why Fees Destroy Compounding

A 1% fee doesn't mean you keep 99% of your returns. Because that 1% is taken from your total balance every year, you lose the principal and all the future compounding that 1% would have generated. Over 30 years, a 1% fee can consume nearly 30% of your potential final balance. See our Platform Fee Calculator to compare specific UK brokers.

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