Compound interest calculator

Two things grow at once. The lump you start with compounds on its own, and every monthly contribution starts compounding from the month you add it. The calculator runs both forward month by month, treating each contribution as landing at the end of its month, and adds them together.

The dashed line is the same contributions with no growth at all: simply what you have paid in by each year. The gap between it and the solid line is the return doing its work. Early on the two lines sit close together; given enough years the growth pulls well clear, which is the whole point of starting sooner.

A projected pot on its own is a number. It becomes a decision the moment you put a date next to it and ask what changes if the money arrives late. A pot that clears the target three years early and a pot that clears it three years late are the same chart and completely different situations. So set the horizon to the year you genuinely need the money, rather than a round twenty, and read the figure at that year rather than at the end of the line.

If it comes up short, there are three things you can move and they are not equally available. More each month works fastest and costs you now. More years is the most powerful lever on the chart and is often the one you do not have, because the date is set by a house, a course or a child. A smaller target is the lever people skip, and it is worth a moment: the number in the box is frequently a round figure rather than the price of the actual thing. Which of the three is cheapest to move is a question about your circumstances, not about the maths.

Before you move any of them, work out which half of the chart you are in, because the response is different. Early on, the two lines sit close together and almost the whole pot is money you paid in: the lever that works is the contribution, and nothing else you do matters much. Given enough years the gap opens and growth becomes the larger part: from there the levers are leaving it alone and keeping the drag down. Drop the growth rate to zero and see how much of the answer survives. If most of it does, you are saving, and the rate assumption is doing very little work.

That is also the reason to enter a growth rate net of charges rather than a headline return. A percentage point of annual cost is invisible in year one and compounds against you exactly the way growth compounds for you. Run the projection twice, a point apart, and the difference is what platform and fund charges are worth over your horizon. Then run it again two points lower on growth, because a plan that survives a poor decade is a different thing from one that needs a good one. Whatever comes out, look at it in today's money before you judge it, since a six-figure total years out does not buy six figures of anything.

If you already know the target and the date, the savings goal calculator runs this backwards and gives you the monthly figure instead. Which brings up the part no compounding calculator can see: whether that monthly figure is still there in month thirty. Contributions compete with the mortgage, the car, the pay rise that arrives and the nursery bill that arrives with it, and a plan interrupted for a year loses far more than a year of growth. Putting the contribution against every other commitment on the same months is the check worth doing, and it is what CrestCast forecasts for a whole household rather than one pot at a time.