How do I go about "compound interest"?

Hello community,

Just opened up a freetrade account and plan to invest in a fund that I have found.

I plan to buy the freetrade plus also.

However, I have a question, I am interested in doing compound interest investing. How about do I go doing that, as I understand what compound interest is, however a little confused to how I actually start doing it?


I want to invest initial amount, then monthly keep putting money in.

ISA issue now fixed.

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You open a GIA automatically. You can switch between them in app by using a button - you can see this on the portfolio page (just below and to the left of where it says portfolio) - if you don’t see, you might not yet have opened the ISA itself. To open the ISA account, tap the profile incon at the top right and select the option to open the ISA.

If you’ve already added funds to the GIA account, you can use the in-app support to move the funds to the ISA for you (or I suppose you could withdraw and then re-add to the ISA account). If you have already bought any funds or stocks, you would need to sell them as they cannot be transferred directly.

edit: Regarding your main question though. I’m not too sure about that though. Wouldn’t that be just using any dividends to buy more shares in the fund(s)? There are also accumulating funds, those automatically reinvest back into the fund as far as I’m aware.

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If you pay in money monthly, you still (presently) have to manually buy the shares you want, this is not automatic. The same will apply to any dividends you may receive (see DRIP).

I believe this is in the pipeline as even Adam wants it, but I suspect the expansion into new markets is taking all of the development time at present.

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Weird I don’t have that option on my portfolio.

And when I go on my profile icon, I don’t have the option to open an ISA account, I only have option of “Upgrade to freetrade plus” and “Open a pension SIPP” which is weird. Luckily I haven’t bought anything yet, but just confused why its GIA account, I opened this up few months ago, but reinstalled app today.

The GIA is the basic free account so this is the default account you will get when you open an account with Freetrade.

The ISA costs £3 a month (or included in Plus fee if you have Plus), therefore you have to apply to open it.

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Yeah, the problem is I don’t have the option anywhere to buy the ISA account for £3? only option I have is the Plus.

Ah I contacted support, and appears I previously had an ISA and it closed, which means they had to re-open it for me :slight_smile:

Compound interest just means earning interest on your interest, “compounding” it. You don’t need to manually select this, it just automatically happens if you invest for a long amount of time.

There’s no guarantee of return rates, but say you have a fund that you expect to return 10% interest per year. If you put £100 in at year zero, you would have £110 after one year. After two years, you would have £110 * 1.10 = £121. Instead of just adding 10% each year, you times the first years value by 10% increase, which is the effect of compounding.

Make sense?

More info here: Compound Interest: Explained With Calculations and Examples


Just don’t withdraw any of your dividends!


Yes, invest your dividends so your dividends will earn dividends.


With the risk of sounding repetitive and I know many people are only interested in stocks. Staking cryptos are a dream come true for dividend investors.

From 5% to 20% annum (depending on the project), staking once or twice at week already “reinvested” and compounded.


Ah yes I watched a video about it which basically said this, this may be a silly question, but when I invest in an index fund that has several shares, how do dividends work then? I get a dividends from the fund? and if yes, how do you see where your dividends are?

I am actually holding crypto, have been for around 7 months.

I have staked some crypto that is stakable, and continue to, however wanted to expand my portfolio into stocks and shares

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Most fund will take distribute the divider at fixed intervals, often quarterly. It will show in your activity feed and you’ll get a notification.

For accumulating funds, they’ll reinvest the dividend on your behalf - this is the easiest way of executing a compound interest strategy.


If you are not holding already crypto then I think some diversification in asset classes would be a good idea.

I agree there is no free lunch and 5%- 20% is indicative, there is inflation in crypto too so you probably going to end with less. But (of course there is a but) I think is still worth and much better then dividend stocks or equities, let’s not even mention bonds - sure maybe a good idea if you are in your 60s.

For once staking rewards are in cryptos and not fiat currency (more prone to inflation and debasement); you get paid every week or twice a week (stock and bond pay dividend every 1,3,6, or 12 months ); your staking rewards are automatically staked, so a significative compound interest is easier to achieve. Plus if the crypto currency increase in value in the long term you are going to see some serious gain.

Sure volatility in the short term can be a pain sometimes but if you able to withstand it (I think) you can make some nice return (again I am a nobody and know nothing just speaking about my personal views and experience).

In 8 months of dollar cost averaging in cryptos that allow staking (50% crypto portfolio) I made much more (with less fiat currency invested) when compared to a longer time frame -2 years- in the equities market (with much more fiat currency invested).

Anyway point of views and completely understandable if you risk appetite is not up for it :+1:

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Oh that makes a lot more sense, thank you!!

In regards to quarterly roughly receiving it, you said it shows up in your activity feed, does that mean the dividends just goes into your balance? or do you have to collect it some way?

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Yes it will go into your available balance and looks like this one I got from Apple.


That is amazing, thank you so much for letting me know.

I do own an apple, so that is nice to see :slight_smile:

Guess its time to start investing and re-investing my dividend :smiley:

Got to wait until marker re-opens


I think American markets are open as usual on Monday but UK is closed for Bank Holiday


US market is open on Monday 30th August!
You will usually get an email from FT notifying you of any dividend payment into your account and a message on the app. There are sometimes delays with notifications. Best to check your activity/balance tabs often. Happy (compound) investing!


If it’s a distributing fund, it’ll be under the activity tab and look something like this (for example):


Edit: Missed @NeilB’s post earlier on this, doh!