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Investment Details
Enter your initial investment and contribution details to see your future wealth

Regular Contributions

The Compound Interest Formula
A = P(1 + r/n)^(nt) + PMT * [((1 + r/n)^(nt) - 1) / (r/n)] * (1 + r/n)
  • A: Future value of the investment
  • P: Initial principal (initial investment)
  • r: Annual interest rate (decimal)
  • n: Number of times interest is compounded per year
  • t: Number of years the money is invested
  • PMT: Regular contribution amount
Tips for Maximizing Growth
  • 1

    Start as early as possible—time is the most important factor in compounding.

  • 2

    Increase the frequency of compounding to earn more interest over time.

  • 3

    Consistent regular contributions, even small ones, significantly boost future value.

  • 4

    Keep your interest rate competitive by comparing different savings products.

  • 5

    Avoid withdrawing the interest to allow it to compound fully.

  • 6

    Consider the impact of inflation on your future purchasing power.

FAQ

Frequently Asked Questions

How does compounding frequency affect my savings?
The more frequently interest is compounded, the more interest you earn. For example, daily compounding earns slightly more than monthly compounding on the same annual rate.
What is the difference between simple and compound interest?
Simple interest is calculated only on the principal amount. Compound interest is calculated on the principal plus any interest already earned.
How do regular contributions help?
Regular contributions increase the principal amount that interest is calculated on, leading to an exponential increase in growth over long periods.

What is Compound Interest?

Compound interest is the interest on a loan or deposit calculated based on both the initial principal and the accumulated interest from previous periods. Thought to have originated in 17th-century Italy, compound interest can be thought of as 'interest on interest,' and will make a sum grow at a faster rate than simple interest, which is calculated only on the principal amount. The rate at which compound interest accrues depends on the frequency of compounding, such that the higher the number of compounding periods, the greater the compound interest.