This free compound interest calculator will help you see how your savings or investments would grow over time based on an expected interest rate. The power of compounding interest can help you prepare for your future by investing today.
Formula to calculate compound interest
This is the formula to calculate compound interest:
- A = P(1+r/n)^nt
These are the variable’s used within the formula to help you calculate compound interest.
A = ending value. P = starting value. r = interest rate. n = number of periods interest is compounded. t = time.
What is compound interest?
Compound interest refers to interest that is added to your initial amount, which then creates a cycle where future interest is now generating on both the initial principal as well as interest previous generated. This allows for investments or savings to grow faster as time increases with all other variables constant.
Time is a very important factor in being able to benefit from the power of compounding. Initially, your portfolio will be comprised of mainly principal. As time goes on and the power of compounding takes over eventually your interest will generate more than your contributions will.
Compound interest calculator
This compound interest calculator helps you determine the impact compounding will have on your investments or savings. This will help you plan your financial goals. For this calcualtor to work you will need to input your starting amount, any contributions that will be made in the future, a interest rate that you expect your money to grow by as well as the total time that this money will be invested for.
How to benefit from compounding
If you want to benefit from the power of compounding, time will be your friend. The longer you can leave your money invested to continue accumulating interest the better. Starting early as well as continuing to make regular contributions will increase the value of your investments and savings over time.