Compound Interest Wealth Calculator
See how your savings can grow over time with the power of compound interest. This calculator helps you visualize the potential growth of your investments based on your initial deposit, regular contributions, and interest rate.
Investment Details
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Future Value
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Understanding Compound Interest
Compound interest is one of the most powerful forces in finance. It's often called "interest on interest" because you earn returns not only on your initial investment, but also on the interest you've already accumulated.
How Does Compound Interest Work?
When you invest money, you earn interest on your capital. The next period, you earn interest on both your original capital and the interest from the first period. In the third period, you earn interest on your original capital and the accumulated interest from both previous periods, and so on.
The formula for compound interest with regular contributions is:
A = P(1 + r/n)nt + PMT × (((1 + r/n)nt - 1) / (r/n))
Where:
- A = Final amount
- P = Initial principal
- r = Annual interest rate (decimal)
- n = Number of compounds per year
- t = Time in years
- PMT = Payment amount per period
Time Is Your Greatest Ally
The earlier you start investing, the more time your money has to grow exponentially. Even small amounts invested regularly can grow significantly over time due to the compounding effect.
Key Factors Affecting Your Returns
- Initial Deposit: The amount you start with forms the foundation of your investment.
- Regular Contributions: Adding money regularly accelerates growth.
- Interest Rate: Higher rates mean faster growth, though they may come with increased risk.
- Time Period: Longer investment horizons dramatically increase final results.
- Compound Frequency: More frequent compounding (monthly versus annually) leads to higher returns.
Use the calculator above to experiment with different scenarios and see how these factors impact your wealth growth over time.