The future value this calculator shows is what a starting balance plus regular monthly deposits grows into once each month's return is added to the pot and next month's return is calculated on the larger total. The gap between that number and your total contributions is the part earned by compounding, and for anyone saving for more than a decade it usually ends up bigger than every deposit combined.
How much of the final balance is actually interest
Put 5,000 in with 300 a month at a 7% annual return for 20 years and the balance reaches about 176,472. You paid in 77,000 across those 240 deposits, so roughly 99,472 — well over half the total — came from growth rather than from your own money.
Stretch the same idea further out and the split becomes more lopsided still. A lump sum of 10,000 left untouched at 6% for 30 years grows to about 60,226, meaning 50,226 of interest sits on top of a contribution that never changed.
As a rough benchmark, once a savings or investment pot has been running for 15-plus years at a mid-single-digit return, expect interest to make up somewhere between a third and two-thirds of the final balance, depending mostly on how early the money went in.
Three scenarios with different starting points
Small lump sum, steady top-ups: 2,000 to start, 500 a month, 8% a year for 10 years reaches about 95,912. You contributed 62,000 in total, so interest supplies about 33,912 — already more than half your contributions despite the relatively short horizon, because the deposit stream is large relative to the starting balance.
Bigger starting balance, smaller deposits: 20,000 to start, 200 a month, 5% a year for 25 years reaches about 188,728, against contributions of 80,000. Interest of roughly 108,728 outweighs every deposit made, which shows how a larger amount invested early can out-earn a bigger monthly habit begun later.
No further deposits at all: the 10,000-at-6%-for-30-years case above shows that even a single deposit left alone compounds to six times its starting size, which is the case for keeping old workplace pensions or child savings accounts invested rather than cashing them out for convenience.
Why the curve looks flat for years and then steep
Compounding is multiplicative, so the absolute size of the monthly interest credit stays small for a long time before it visibly accelerates. In the 5,000-plus-300-a-month example, the balance needed about 12 years to reach its first 100,000, then only about 5 more years to add the next 75,000 on top.
That pattern is the main reason early years feel discouraging: the return on a small balance is a small number of currency units even at a healthy percentage rate. Patience through the flat part of the curve is what buys the steep part later, and stopping contributions in year three loses far more future value than stopping in year twenty.
It also means a short delay at the start costs more than the same delay later. Waiting five years before starting the 20-year, 5,000-plus-300 plan above removes an entire compounding cycle from the highest-leverage part of the timeline, not just five years of deposits.
Where the calculation stops matching reality
The maths assumes a fixed monthly return applied evenly every period, but real investment returns arrive in an uneven sequence of gains and losses that only average out to something like 7% over long stretches. Two savers who deposit the same amounts over the same 20 years can end up with different balances purely because of when the good and bad years happened to fall, an effect called sequence-of-returns risk.
It also assumes the deposit amount never changes and no money is withdrawn early. Skipping deposits during a job loss, or pulling out the balance for a house deposit partway through, breaks the compounding chain and the actual balance will fall well short of the projection from that point on.
None of the figures here account for fees, tax on interest or dividends, or inflation eroding the spending power of the final number. A 7% nominal return might be closer to 4-5% in today's money once typical inflation is stripped out, so treat the headline balance as a nominal figure rather than a guaranteed amount of future purchasing power.
Account type and timing caveats
In the US, interest earned in an ordinary savings or brokerage account is taxable in the year it is credited even if you never withdraw it, while money inside a 401(k), traditional IRA or Roth IRA grows without that annual drag, which is one reason tax-advantaged accounts compound faster in practice than the raw rate suggests.
In the UK, interest and investment growth inside an ISA is free of income and capital gains tax entirely, whereas the same growth held outside a wrapper can be chipped away by the personal savings allowance running out or by capital gains tax on withdrawal, so the account wrapper matters as much as the return itself.
Compounding frequency also matters at the margins: a rate quoted as compounding daily or continuously will produce a slightly higher balance than the same annual rate compounded monthly, though the difference over normal savings timeframes is usually a small fraction of a percentage point rather than something that changes the overall picture.
Frequently asked questions
- How does compound interest actually work month to month?
- Each month the balance grows by one twelfth of the annual rate, and that larger amount — not the original deposit alone — is what earns interest the following month. Your new monthly deposit is then added on top, so it starts earning from the next period onward rather than retroactively.
- Is 7% a realistic annual return to plan around?
- It is a commonly used long-run average for a diversified stock-heavy portfolio before inflation, roughly in line with historical US equity market performance over multi-decade periods, but any single year can be sharply higher or lower. Treat it as a planning assumption for a horizon of a decade or more, not a guaranteed short-term outcome.
- Why does the balance barely move for the first few years?
- Interest is a percentage of a still-small balance, so the currency amount it adds each month starts out tiny even at a good rate. The 5,000-plus-300-a-month example above takes about 12 years to first pass 100,000 but only about 5 more years to add the next 75,000, because the growth is compounding on an increasingly large base.
- Does it matter whether I deposit monthly or once a year?
- Yes, slightly: money deposited earlier in the year has more months to compound before the year ends, so monthly deposits made at the start of each month out-earn the same total deposited in one lump sum at year end. The effect is small compared with the size of the deposits themselves, but it consistently favours depositing sooner rather than later.
- Should I include an ISA or 401(k) tax wrapper in the numbers?
- This calculator projects growth before any tax, so if the money sits in a taxable account you should expect the real-world balance to run behind the projection once tax on interest, dividends or gains is paid. Money held inside a UK ISA or a US Roth IRA can compound closer to the raw projected figure because that growth is not taxed.
- How much difference does starting five years earlier make?
- A large one, because the earliest years are the ones compounding for the longest afterward. Removing the first five years from a 20-year plan does not just remove five years of deposits, it removes the years those deposits would otherwise have had the most time left to grow, which is usually the single biggest lever in any savings plan.
Sources
- Internal Revenue Service — traditional and Roth IRAs — Confirms tax-deferred or tax-free growth treatment inside IRAs versus taxable brokerage accounts, guidance current as of 2025.
- HM Revenue & Customs — Individual Savings Accounts (ISA) — Confirms interest and investment growth inside a UK ISA is exempt from income tax and capital gains tax, guidance current as of 2025.