What is Compounding?
Compound Interest is interest calculated on the initial principal, which also includes all the accumulated interest from previous periods. Think of it as "interest on interest."
Frequency Matters
The frequency of compounding significantly impacts your returns. Daily compounding yields more than Annual compounding because interest is added to your principal more often.
Long-Term Growth
Compound interest works best with time. The longer you leave your money invested, the more exponential the growth becomes. This is key for retirement planning.
The Formula
Unlike simple interest, this formula accounts for the number of times interest is applied per time period.
A = P (1 + r/n)nt
Why Use a Compound Interest Calculator?
Understanding the power of compound interest is the "eighth wonder of the world," according to Einstein. Whether you are planning for retirement, saving for a house, or investing in the stock market, this tool helps you visualize how your money can grow exponentially.
Use this investment growth calculator to compare different scenarios. See how increasing your monthly contribution (if applicable in advanced versions) or securing a slightly higher interest rate can drastically change your financial future over 10, 20, or 30 years.