Got it — let’s carefully break this down. You’re describing a situation where:

  • You start with £1,400 (your interest income).
  • You add £420 every year (like a yearly contribution).
  • The total grows with compound interest over 25 years.

To calculate this, we use the future value of an annuity plus the initial lump sum:

FV=P\cdot (1+r)^t+C\cdot \frac{(1+r)^t-1}{r}

Where:

  • P=1400 (initial lump sum)
  • C=420 (annual contribution)
  • r = annual interest rate (this is the missing piece!)
  • t=25 years

Example with 7% annual interest

  • Lump sum growth:

1400\cdot (1.07)^{25}\approx 7,600

  • Contributions growth:

420\cdot \frac{(1.07^{25}-1)}{0.07}\approx 26,900

  • Total after 25 years ≈ £34,500

From below you start with 20k of seed capital and re-invest the dividends and add 6k pa and re-invest those dividends also.

The above graph is AI generated and so may not be accurate but the overall growth story, without relying on lady luck, is indicative of what can be achieved.

As you intend to use your dividend stream as an ‘annuity’ the value of your pot is of no interest.