£100 a Month With Compound Interest: What It Becomes
Save £100 a month at 5% interest, compounded monthly, and you will have about £6,801 after 5 years, £15,528 after 10 years and £41,103 after 20 years. Only £12,000 of that 10-year figure is your own money; the other £3,528 is interest, and the share that comes from interest keeps growing the longer you leave it.
This guide shows where those numbers come from, how to work them out yourself step by step, and how different interest rates and time frames change the result. The maths is identical for $100 a month in the US, so every figure below works in dollars too.
This is general information, not financial advice. Interest rates change, and investment returns are not guaranteed.
How compound interest works on monthly savings
Simple interest pays you only on the money you put in. Compound interest pays you on your deposits and on the interest already added. Each month the balance grows a little, and next month’s interest is calculated on that slightly bigger balance.
With a regular monthly deposit there are two things compounding at once: the money already in the account, and each new £100 as it arrives. The first £100 you save earns interest for the whole term, while the last £100 earns almost nothing. That is why the first few years look slow and the later years look dramatic.
The standard formula for the future value of regular monthly payments (an “ordinary annuity”, where each deposit is made at the end of the month) is:
FV = M × ((1 + i)n − 1) ÷ i
- M = the monthly deposit (for example £100 or $100)
- i = the monthly interest rate, which is the annual rate ÷ 12 (5% ÷ 12 = 0.0041667)
- n = the number of months (10 years = 120 months)
If you also start with a lump sum P, add P × (1 + i)n to the result.
Step-by-step method
- Convert the annual rate to a monthly rate. Divide the percentage by 100, then by 12. For 5%: 0.05 ÷ 12 = 0.0041667.
- Count the months. Multiply the years by 12. Ten years is 120 months.
- Work out the growth factor. Calculate (1 + i)n. Use the xy button on a calculator.
- Subtract 1 and divide by the monthly rate. This gives the value of £1 a month over the term.
- Multiply by your monthly deposit. Then add any starting lump sum grown by the same factor.
- Split the result. Subtract what you paid in (M × n, plus any lump sum) to see the interest earned.
Worked example: £100 a month for 10 years at 5%
Here is the full calculation, line by line.
- Monthly rate: i = 0.05 ÷ 12 = 0.0041667
- Number of months: n = 10 × 12 = 120
- Growth factor: (1.0041667)120 = 1.64701
- Subtract 1: 1.64701 − 1 = 0.64701
- Divide by i: 0.64701 ÷ 0.0041667 = 155.282
- Multiply by the deposit: 155.282 × £100 = £15,528.23
- Total paid in: £100 × 120 = £12,000
- Interest earned: £15,528.23 − £12,000 = £3,528.23
You can sanity-check the start of the sequence by hand. At the end of month 1 you have £100. In month 2 that earns £0.42 interest and you add another £100, giving £200.42. In month 3 the £200.42 earns £0.84, and with the next deposit you reach £301.25. Repeat that 120 times and you land on £15,528.23.
Adding a starting lump sum
Suppose you already have £1,000 in the account. That lump sum grows by the same factor: £1,000 × 1.64701 = £1,647.01. Add it to the monthly savings result:
- £1,647.01 + £15,528.23 = £17,175.24
- Total paid in: £1,000 + £12,000 = £13,000
- Interest earned: £4,175.24
£100 a month: reference table by rate and term
All figures assume £100 (or $100) paid at the end of each month, interest compounded monthly at the stated annual rate, no starting balance, and no tax, fees or inflation. The “Paid in” row shows your own money.
| Annual rate | 1 year | 5 years | 10 years | 20 years | 30 years |
|---|---|---|---|---|---|
| Paid in | £1,200 | £6,000 | £12,000 | £24,000 | £36,000 |
| 2% | £1,211 | £6,305 | £13,272 | £29,480 | £49,273 |
| 3% | £1,217 | £6,465 | £13,974 | £32,830 | £58,274 |
| 4% | £1,222 | £6,630 | £14,725 | £36,677 | £69,405 |
| 5% | £1,228 | £6,801 | £15,528 | £41,103 | £83,226 |
| 7% | £1,239 | £7,159 | £17,308 | £52,093 | £121,997 |
Two patterns stand out. Over one year the rate barely matters: the gap between 2% and 7% is only £28. Over 30 years the same gap is more than £72,000. And at 7% for 30 years, interest makes up about £86,000 of the £122,000 total, more than double what you paid in.
What changes the real result
AER and APY versus the headline rate
UK savings accounts quote an AER (Annual Equivalent Rate) and US accounts quote an APY (Annual Percentage Yield). Both already include the effect of compounding within the year. A 5% rate compounded monthly is equivalent to an AER of about 5.12%. If your account says 5% AER and pays monthly, the matching monthly rate is slightly lower, around 4.89% ÷ 12. Using that, £100 a month for 10 years gives about £15,436 rather than £15,528. The difference is small, but worth knowing when comparing accounts.
Inflation
The Bank of England and the US Federal Reserve both target 2% inflation. If prices rise by 2% a year while you earn 5%, your real (inflation-adjusted) return is about 2.94%, because 1.05 ÷ 1.02 = 1.0294. At that real rate, £100 a month for 20 years grows to roughly £32,620 in today’s money, compared with £41,103 before inflation. Your savings still grow in real terms, just more slowly than the headline figure suggests.
Tax and account type
Interest in an ordinary account may be taxable once it goes above your allowance. In the UK, a cash or stocks and shares ISA shelters growth from tax; in the US, accounts such as a Roth IRA or 401(k) can do a similar job for retirement savings. Allowances and rules change, so check current limits on GOV.UK or IRS.gov before choosing.
Quick mental shortcuts
- Rule of 72: divide 72 by the annual rate to estimate how many years it takes a lump sum to double. At 5%, 72 ÷ 5 = 14.4 years (the exact answer with monthly compounding is 13.9 years).
- Starting early beats saving more: £100 a month for 30 years at 5% reaches £83,226 from £36,000 paid in. Waiting ten years and saving £200 a month for 20 years reaches £82,207, from £48,000 paid in. The late starter puts in £12,000 more and still ends up slightly behind.
- Short terms are nearly flat: for anything under about three years, your total is close to the sum of your deposits plus a little. Rate hunting matters most for long-term money.
Frequently asked questions
How much will £100 a month be worth in 10 years?
At 5% compounded monthly, about £15,528, of which £12,000 is your deposits and £3,528 is interest. At 3% it is about £13,974, and at 7% about £17,308.
How long does it take to save £10,000 at £100 a month?
With no interest it takes 100 months, or 8 years and 4 months. At 5% compounded monthly you get there sooner, after 84 months (exactly 7 years), when the balance reaches about £10,033, because interest covers part of the gap.
Does it matter if I pay in at the start or end of the month?
Slightly. Paying at the start of each month gives every deposit one extra month of interest, which multiplies the total by (1 + i). At 5% over 10 years that adds about £65, taking £15,528 to roughly £15,593.
Is £100 a month the same calculation in dollars?
Yes. Compound interest does not depend on the currency. $100 a month at 5% compounded monthly grows to the same figures shown in the table, just in dollars.
Run your own numbers
To try a different deposit, rate or term, use our free savings and compound interest calculator. It compounds monthly and adds your contribution at the end of each month, exactly like the examples above, and splits the result into money paid in and interest earned. If you are wondering what rate to assume for long-term investing, read what growth rate to use for retirement planning, and if you are trying to find that £100 each month in the first place, our guide to the 50/30/20 budget rule is a good place to start.