Compound interest calculator

Compound interest calculator

This compound interest calculator calculates interest and future value of your investments over a specified period. You will understand the power of compounding through saving using this calculator. If you invest your money for a fixed interest rate with a financial institution, and make regular contributions to your account, you can watch your money grow over time.

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Guide to using the compound interest calculator

Populate all the fields. If you already have an investment, enter your current balance in the initial investment field. Otherwise, enter your first contribution to the account in this field. Next, enter your regular contributions. For ease of computation, the calculator recalculates your contributions to match the compounding frequency. For example, if you make a weekly contribution of $100 and the compounding frequency is monthly, the calculator will convert the weekly contribution to a monthly contribution of $400. Enter your annualized interest rate as agreed upon with your financial institution, and the compounding interval. Typically it will be monthly. Finally, enter your investment horizon. This is how long you plan to invest.

You will soon realize how powerful compounding actually is. Say you have the capability to save $100 every month. If you hide this money under your mattress, at the end of 10 years, you will have saved only $12,000 (100*10*12). However, if you invest your savings of $100 every month for 10 years at a fixed rate of 5%, at the end of 10 years you will have $ 15,692.93. This is the power of compounding.

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