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so... compound interest...
james3333
Posts: 752 Forumite
does it mean that if i put £3,000 into an ISA this year.....and obviously get interest on it..... then next year another £3,000 will i get interest on 6,000?
0
Comments

If you invest £3,000 this tax year, at 5% interest you will have £3,150 at the end of the tax year, assuming it has been in there the whole year, so next year, assuming you invest another £3,000, you'll get interest on £6,150, so assuming 5% again, you'll have £6,457.50 after 2 years.
Obviously delays in depositing the money, will result in less interest being paid.2014 running challenge 587.4 miles / 250 miles0 
Short answer is yes.
Long(er) answer is that compound interest is the interest you get in the second year on the interest you were paid in the first year (providing it was paid into the account).
Example 3,000 @ 5% gets you £150 interest. Second years you get 5% on 3,150 (157.70). So even without adding any more, you get slightly more interest every year.
You can of course keep adding 3,000 a year (until 2010 at present).0 
Ok, so 5% makes it easier... LOL0

Bloody Real!
Cheers Guys0 
So if I have £3150 including interest, I cam still put another £3000 in the next year rather than just £2850?0
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