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Time + Compound Interest

= BIG Savings Pots

Play around with our

compound interest calculator

We've added this simple calculator to allow you to play around and understand the power of compound interest.

The way compound interest works is you save money and you earn interest on that money saved.

 

The interest is added onto your savings balance which increases your savings pot. 

 

The next year, you earn more interest because you are earning interest on the money saved plus the interest from last year. 

 

The next year, you earn even more interest as you are earning interest on the original amount plus year 1's interest AND year 2's interest. 

 

This continues every year the money is invested growing the savings by increasing amounts each year.  This is why it is important to start as early as possible and stay invested for as long as you can.

 

Compound Interest Example

£1,000 invested in the stock market at 14% over 18 years

£10,575

£1,000 invested in the cash account at 2.95% over 18 years

£1,687

The difference is just under £9,000