Regular deposits
Compound Interest With Monthly Deposits
See how monthly contributions affect compound interest, including beginning vs end-of-period deposits and worked examples.
Compound interest with regular deposits
Regular deposits can make a large difference to compound growth. A starting amount gives you an initial base, but each extra deposit adds more money that can also earn interest over the remaining term.
This is why two calculations with the same interest rate and time period can end with very different results if one includes monthly contributions.
Example: £10,000 plus £250 per month for 10 years
At 5% annual interest compounded monthly, an initial £10,000 plus £250 per month could grow to around £55,290.66 after 10 years. The total deposits would be £30,000.00, before counting the starting amount.
| Input | Value |
|---|---|
| Starting amount | £10,000 |
| Monthly deposit | £250 |
| Interest rate | 5% |
| Time | 10 years |
| Estimated final balance | £55,290.66 |
| Estimated interest earned | £15,290.66 |
Open the £10,000 plus £250 monthly example.
Beginning vs end of period deposits
If deposits are made at the beginning of each period, each deposit gets slightly longer to earn interest. If deposits are made at the end of each period, the deposit starts earning from the next compounding period. The difference can be small over short terms but becomes more noticeable over longer terms.
Example: starting from £0 and saving £100 per month
Regular saving can still compound even if the starting amount is zero. For example, £100 per month at 5% for 20 years could grow to around £41,103.37.
| Scenario | Final balance |
|---|---|
| £100 monthly for 5 years at 5% | £6,800.61 |
| £100 monthly for 10 years at 5% | £15,528.23 |
| £100 monthly for 20 years at 5% | £41,103.37 |
| £100 monthly for 30 years at 5% | £83,225.86 |
How to use the calculator for monthly deposits
- Enter your starting amount.
- Enter the annual interest rate.
- Choose your term in years and months.
- Set contribution mode to deposits.
- Enter the contribution amount and choose monthly as the frequency.
- Choose whether deposits happen at the beginning or end of the period.
Calculate it yourself
Use the free compound interest calculator to adjust the amount, rate, term, compounding frequency and regular deposits.
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