Compound Interest Calculator
Calculate the future value of your investments with compound interest. See how your money grows over time with detailed year-by-year breakdown.
Investment Details
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How to Use
- 1.Enter your initial investment amount (principal)
- 2.Input the annual interest rate as a percentage
- 3.Set the investment duration in years
- 4.Choose how often interest compounds
- 5.Optionally add regular deposits to see enhanced growth
About Compound Interest
Compound interest is the addition of interest to the principal sum of a loan or deposit. It's interest on interest, which makes your money grow faster than simple interest.
The more frequently interest compounds, the more you earn. Daily compounding yields slightly more than monthly, which yields more than yearly compounding.
Frequently Asked Questions
What is compound interest?
Compound interest is interest calculated on the initial principal and also on the accumulated interest from previous periods. It's essentially "interest on interest" and can significantly increase your investment returns over time.
How is compound interest calculated?
Compound interest is calculated using the formula: A = P(1 + r/n)^(nt), where A is the final amount, P is the principal, r is the annual interest rate, n is the compounding frequency, and t is time in years.
What is the difference between simple and compound interest?
Simple interest is calculated only on the principal amount, while compound interest is calculated on the principal plus accumulated interest. Compound interest grows faster because you earn interest on your interest.
How often should interest be compounded?
More frequent compounding results in higher returns. Daily compounding yields more than monthly, which yields more than quarterly or yearly. However, the difference becomes smaller as frequency increases.