Calculate Compound Interest
See how your money grows with compound interest over time.
Investment Growth Results
Future Value
Total investment value
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Total Contributions
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Interest Earned
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Annual Growth
Average annual return
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Investment Breakdown
Understanding Compound Interest
Compound interest is the eighth wonder of the world. It's interest calculated on the initial principal and also on the accumulated interest of previous periods. This creates exponential growth over time.
How Compound Interest Works
The compound interest formula is: A = P(1 + r/n)^(nt)
- A = Future value of investment
- P = Principal investment amount
- r = Annual interest rate (decimal)
- n = Number of times interest compounds per year
- t = Time in years
Compound Interest vs Simple Interest
| Year | Simple Interest ($1,000) | Compound Interest ($1,000) |
|---|---|---|
| 1 | $1,050 | $1,050 |
| 5 | $1,250 | $1,276 |
| 10 | $1,500 | $1,629 |
| 20 | $2,000 | $2,653 |
| 30 | $2,500 | $4,322 |
Frequently Asked Questions
What's the difference between APR and APY?
APR (Annual Percentage Rate) doesn't include compounding, while APY (Annual Percentage Yield) does. APY shows the actual return you'll earn.
How often should interest compound?
More frequent compounding (daily vs annually) yields higher returns. However, the difference is small at lower interest rates.