Investment & ISA Calculator

Calculated using compound interest formula — see our methodology

How much will your investment grow?

Compound growth is the single most powerful force in personal finance. Money invested today does not just earn a return — it earns a return on all previous returns. The longer you stay invested, the more dramatic the effect. This calculator shows you exactly what compound growth looks like for your specific numbers.

ISA vs taxable account: does the wrapper matter?

In an ISA, all gains and dividends are free of UK income tax and capital gains tax. In a taxable account, gains above the annual CGT allowance (£3,000 in 2025/26) are taxed at 18% (basic rate) or 24% (higher rate). For long-term investment over 10+ years, the tax drag on a taxable account is significant — it functions as negative compounding on your returns. The calculator's ISA mode shows growth untouched by tax; the taxable mode applies an approximate annual tax drag.

What return rate should I use?

Global equity index funds have historically returned 7–10% annually in nominal terms (before inflation). After inflation, real returns are typically 5–7%. A balanced portfolio (60% equities, 40% bonds) has historically returned 5–7% nominally, or 3–5% in real terms. Use 7% for a realistic equity-only projection, 5% for a balanced portfolio, or 4% for a conservative scenario. The calculator shows nominal returns — to think about real purchasing power, subtract your inflation assumption.

The ISA annual allowance and why it matters

In 2025/26 every UK resident can shelter up to £20,000 from tax inside an ISA. That £20,000 limit covers all ISA types combined — Cash ISA, Stocks and Shares ISA, Innovative Finance ISA, and Lifetime ISA (which has its own £4,000 sub-limit). Contributions do not carry over: unused allowance from one tax year cannot be rolled into the next. Use it or lose it, every April.

For a long-term investor, the ISA wrapper is enormously valuable. On a £100,000 portfolio returning 7% annually over 20 years, a higher-rate taxpayer in a taxable account might lose 30–40% of their gains to income tax on dividends and CGT on disposal. Inside a Stocks and Shares ISA, every penny of that growth is yours.

Compound growth: why time beats amount

The most counterintuitive result compound growth produces: starting ten years earlier matters more than doubling your monthly contribution. An investor who puts £300/month from age 25 to 65 at 7% annually ends up with more than twice as much as one who puts £600/month from age 35 to 65 at the same rate. The first investor contributed half as much money in total. This is the compounding effect — growth on top of growth, accumulating for longer.

This is why the standard financial planning advice is to start investing as soon as possible, even with a small amount, rather than waiting until you can afford to invest a "worthwhile" sum. There is no worthwhile sum — there is only time, and it is the one resource you cannot buy back.

Choosing between a Stocks and Shares ISA and a pension

Both shelter your money from tax on growth. The key differences are access and tax treatment. A pension gives you upfront tax relief — a basic-rate taxpayer adding £800 sees £1,000 go into the pension. A Stocks and Shares ISA gives you no upfront relief, but withdrawals are entirely tax-free and you can access the money at any age. A pension locks money away until age 57 (rising to 58 in 2028) and withdrawals above the tax-free lump sum are taxed as income.

The right answer for most people is both, in this order: pension contributions up to the full employer match (free money), then ISA contributions, then additional pension contributions if you are a higher-rate taxpayer. If you cannot afford both, the employer pension match always wins.

A worked example: 20 years of monthly investing

Starting with £5,000 and adding £300 per month for 20 years at a 7% annual return: total contributions of £77,000 grow to approximately £178,000 — a gain of around £101,000. The growth exceeds the contributions by the 13th year. In the final five years, the portfolio earns more from investment returns than from new contributions. This is the tipping point compound growth eventually creates for every consistent investor.