Investment calculator
Investment summary
With an initial investment of £10,000, contributing £1,000 annually for 10 years at an annual return of 7.00%, your investment could grow to £33,488. That means you'll have contributed £20,000 in total, and your returns would account for £13,488 of that amount. Not bad for letting your money work for you over time!
Let's break it down:
- You start with an initial investment of £10,000.
- You then contribute £1,000 per year for 10 years, adding up to a total contribution of £20,000.
- The rest, £13,488, comes from growth on your initial investment and returns on your contributions. That's the power of compound interest at play.
- At the end of the investment period, 59.72% of your total balance comes from your contributions, while 40.28% comes from growth.
- Contributions
- Growth
Compound interest
The beauty of investing isn't just in your contributions. It's in the way your money grows on itself. Compound interest means that the returns you make one year earn returns in the following years. Over time, this can make a huge difference in your total return. In this calculator, we use monthly compounding to provide a more accurate representation of how your investment might grow.
For example, with 7.00% annual returns (compounded monthly) over 10 years, the growth of your investment will accelerate as the years go by. In the early years, your returns are smaller, but as the invested amount grows, the compounding effect kicks in more noticeably. Monthly compounding can result in slightly higher returns compared to annual compounding, especially over longer investment periods.
Year-by-year investment breakdown
| Year | Balance | Total contributions | Total growth |
|---|---|---|---|
| 0 | £10,000 | £10,000 | £0 |
| 1 | £11,700 | £11,000 | £700 |
| 2 | £13,519 | £12,000 | £1,519 |
| 3 | £15,465 | £13,000 | £2,465 |
| 4 | £17,548 | £14,000 | £3,548 |
| 5 | £19,776 | £15,000 | £4,776 |
| 6 | £22,161 | £16,000 | £6,161 |
| 7 | £24,712 | £17,000 | £7,712 |
| 8 | £27,442 | £18,000 | £9,442 |
| 9 | £30,363 | £19,000 | £11,363 |
| 10 | £33,488 | £20,000 | £13,488 |
Optimise your growth
Contribution frequency matters: Investing a lump sum upfront gives compounding a longer runway, but contributing regularly (annually) still adds up quickly. If you bump your annual contribution to £1,500, for instance, your final balance could grow to £40,396—a significant increase.
Duration is key: The longer your money stays invested, the bigger the potential returns. If you extend your investment from 10 years to 15 years, your total balance could grow to £52,719. Time truly amplifies the power of compound interest.
Consider the risks
While historical returns on investments like the stock market might average 7-8% annually, it's important to remember that no return is guaranteed. Investing involves risk, and some years may see negative returns. That's why it's crucial to diversify and consider your long-term goals. Over time, the market tends to reward patience, but always be aware of the risks.
Investment Calculator
Investment summary
With an initial investment of £10,000, contributing £1,000 annually for 10 years at an annual return of 7.00%, your investment could grow to £33,488. That means you'll have contributed £20,000 in total, and your returns would account for £13,488 of that amount. Not bad for letting your money work for you over time!
Let's break it down:
- You start with an initial investment of £10,000.
- You then contribute £1,000 per year for 10 years, adding up to a total contribution of £20,000.
- The rest, £13,488, comes from growth on your initial investment and returns on your contributions. That's the power of compound interest at play.
- At the end of the investment period, 59.72% of your total balance comes from your contributions, while 40.28% comes from growth.
- Contributions
- Growth
Compound interest
The beauty of investing isn't just in your contributions. It's in the way your money grows on itself. Compound interest means that the returns you make one year earn returns in the following years. Over time, this can make a huge difference in your total return. In this calculator, we use monthly compounding to provide a more accurate representation of how your investment might grow.
For example, with 7.00% annual returns (compounded monthly) over 10 years, the growth of your investment will accelerate as the years go by. In the early years, your returns are smaller, but as the invested amount grows, the compounding effect kicks in more noticeably. Monthly compounding can result in slightly higher returns compared to annual compounding, especially over longer investment periods.
Year-by-year investment breakdown
| Year | Balance | Total contributions | Total growth |
|---|---|---|---|
| 0 | £10,000 | £10,000 | £0 |
| 1 | £11,700 | £11,000 | £700 |
| 2 | £13,519 | £12,000 | £1,519 |
| 3 | £15,465 | £13,000 | £2,465 |
| 4 | £17,548 | £14,000 | £3,548 |
| 5 | £19,776 | £15,000 | £4,776 |
| 6 | £22,161 | £16,000 | £6,161 |
| 7 | £24,712 | £17,000 | £7,712 |
| 8 | £27,442 | £18,000 | £9,442 |
| 9 | £30,363 | £19,000 | £11,363 |
| 10 | £33,488 | £20,000 | £13,488 |
Optimise your growth
Contribution frequency matters: Investing a lump sum upfront gives compounding a longer runway, but contributing regularly (annually) still adds up quickly. If you bump your annual contribution to £1,500, for instance, your final balance could grow to £40,396—a significant increase.
Duration is key: The longer your money stays invested, the bigger the potential returns. If you extend your investment from 10 years to 15 years, your total balance could grow to £52,719. Time truly amplifies the power of compound interest.
Consider the risks
While historical returns on investments like the stock market might average 7-8% annually, it's important to remember that no return is guaranteed. Investing involves risk, and some years may see negative returns. That's why it's crucial to diversify and consider your long-term goals. Over time, the market tends to reward patience, but always be aware of the risks.