Guide
How to Read a Compound Interest Chart
See what the growth curve is showing, how to separate contributions from interest, and why the line speeds up later. Then try your own numbers in the calculator.
Published: March 12, 2025 · Updated: December 21, 2025 · By FinToolSuite Editorial
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Use the calculator to see the chart, toggle contributions, and compare scenarios side by side.
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The curve starts slow because the balance is small, then picks up speed as interest earns interest.
- Horizontal axis: time (months or years)
- Vertical axis: balance or projected value
- Shaded areas/lines: often split between contributions and interest
Disclaimer
Educational purposes only; not financial advice. Examples are illustrative; real returns vary and investments can go down as well as up. Fees, taxes, inflation, and account rules vary by provider and country.
What the curve means
Early years show a shallow line because interest is calculated on a smaller balance. Later years rise faster because the base is larger and each period adds interest on top of prior interest. Most of the visible lift happens toward the back half of the timeline.
Contributions vs interest
Charts often split the line or fill to show how much comes from what you put in versus growth. Principal is your starting amount, contributions are the extra you add, and interest/returns is the growth on top of that.
| Item | Example (rounded) |
|---|---|
| End balance | £29,500 |
| Total contributed | £22,000 |
| Interest earned | £7,500 |
The “interest earned” portion is what makes the curve steepen over time. For a clearer split of contributions versus growth, see this breakdown.
Why the curve accelerates
Each period’s interest is added to the balance, so the next period’s calculation starts from a higher base. Over many periods, that feedback loop creates the upward bend you see in the chart.
Year 1 end: £1,000 → £1,050 (5% on £1,000)
Year 2 end: £1,050 → ~£1,102.50 (5% on a bigger base)
Year 3 end: ~£1,102.50 → ~£1,157.60
What changes the chart the most
- Time horizon: more years give compounding room to work.
- Rate or return assumption: small changes shift the slope over time.
- Monthly contributions: steady deposits lift the whole line.
- Compounding frequency: monthly vs yearly changes the curve slightly.
- Withdrawals or fees: these flatten the curve.
Three chart experiments to try
Experiment A: Same rate, 10 vs 25 years
- Inputs: £1,000, 5% annually, monthly compounding, no contributions.
- Notice: the 25-year curve bends much more in later years.
Experiment B: Same years, add £50/month
- Inputs: £1,000 starting, £50/month, 5% annually, 20 years.
- Notice: contributions lift the line steadily, and interest stacks on top.
Experiment C: Monthly vs yearly compounding
- Inputs: £1,000, 5% annually, 15 years; switch between monthly and yearly compounding.
- Notice: monthly compounding is a bit higher, but time and rate drive most of the difference.
Common chart-reading mistakes
- Mixing contributions and interest when reading stacked fills.
- Expecting a straight line; compound growth is curved.
- Comparing scenarios when several inputs changed at once.
FAQ
Why does the chart look flat at first?
Early balances are smaller, so the interest amounts are smaller and the curve looks flatter.
Does daily compounding change the curve much?
It nudges the line upward slightly versus yearly, but time and rate matter more for the shape.
How do I tell how much is interest versus contributions?
Look for stacked fills or labels that split “contributions” from “interest.” The calculator shows both totals.
Why might the real world not match the chart?
Fees, taxes, inflation, variable returns, and withdrawals all change the path versus a simple projection.
What happens if I withdraw money?
Withdrawals reduce the base, which flattens the curve because less balance remains to earn interest.
How do I compare two scenarios fairly?
Change one input at a time—such as years, rate, or contribution—so you can see which factor moves the curve.
Run your own chart
Save a base, optimistic, and conservative scenario in the calculator to see how the curve shifts.
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