compound interest calculator. Calculate compound interest savings for savings, loans, and mortgages without having to create a formula.See How Fast Your Money Grows.
Note: Present Value (PV) is typically calculated for a lump-sum investment to determine the initial capital needed to reach a future goal.
| Year | Opening Balance | Annual Contribution | Annual Interest | Closing Balance |
|---|
This compound interest calculator has more features than most. You can vary both the deposit intervals and the compounding intervals from daily to annually (and everything in between)
This flexibility allows you to calculate and compare the expected interest earnings on various investment scenarios so that you know if an 8% return, compounded daily is better than a 9% return, compounded annually.
It's simple to use. Just enter your beginning balance, the regular deposit amount at any specified interval, the interest rate, compounding interval, and the number of years you expect to allow your investment to grow.
Compound interest is the interest calculated on the initial principal and also on the accumulated interest of previous periods of a deposit or loan. Interest which is calculated not only on the initial principal but also the accumulated interest of prior periods. Compound interest differs from simple interest in that simple interest is calculated solely as a percentage of the principal sum.
Compound interest calculator is used to calculate compound interest for various time intervals (yearly, half hearly, Quarterly, monthly or daily).The higher the number of compounding periods, the larger the effect of compounding.
Compound interest is calculated by multiplying the initial principal amount by (1 + annual interest rate) raised to the power of the number of compounding periods, and then subtracting the principal.
The formulas for calculating compound interest are:
= [P (1 + i)n] – P
or
= P [(1 + i)n – 1]
Where:
For example, if you had a 3-year loan of $10,000 at an interest rate of 5%, compounding annually. What would be the amount of interest? In this case, using the latter formula, it would be:
$10,000 [ ( 1 + 0.05 )3 – 1 ] = $10,000 [ 1.157625 – 1 ] = $1,576.25
Tip
The Rule of 72 is another way to estimate compound interest. If you divide 72 by your rate of return, you find out how long it will take for your money to double in value. For example, if you have $100 that was earning a 4% return, it would grow to $200 in 18 years (72 / 4 = 18).Future value calculator is a smart tool that allows you to quickly compute the value of any investment at a specific moment in the future.
To compute the future value of your investment, you don't need to memorize any formulas or perform any calculations. All you need to do is to fill in the appropriate fields on our calculator:
To calculate the future value of your investment, you can use this equation:
FV = PV × (1 + r)^n
where:
That's it! In less than a second, our calculator makes every computation and displays the results. They are shown in the future value field, where you should see the future value of your investment.
In conclusion, the future value calculator helps you make smart financial decisions. With the mobile version of our application, you can also use our FV calculator wherever and whenever you want.。
Present value is compound interest in reverse: finding the amount you would need to invest today in order to have a specified balance in the future.
To compute the present value of your investment, you don’t need to memorize any formulas or perform calculations. Simply fill in these fields on our calculator:
To calculate the present value of future incomes, you should use this equation:
PV = FV / (1 + r)n
where:
In our example, it will look like this:
$100 / (1 + 0.08)2 = $85.73
Now you know how to estimate the present value of your future income on your own, or you can simply use our present value calculator.
Because compound interest includes interest accumulated in previous periods, it grows at an ever-accelerating rate. It can significantly boost investment returns over the long term.
For example, over 10 years, a $100,000 deposit receiving 5% simple annual interest would earn $50,000. But with monthly compounding at 5%, the total interest would be nearly $65,000. This difference becomes even more dramatic over longer periods.
Suppose you deposit $15,000 into a high-yield savings account offering a 5% annual percentage yield (APY), with interest compounded daily. You plan to make no additional contributions after the initial deposit. To project your earnings, input these parameters into a compound interest calculator:
PV (along with FV, I/Y, N, and PMT) is an important element in the time value of money, which forms the backbone of finance. There can be no such things as mortgages, auto loans, or credit cards without PV.
To learn more about or do calculations on future value instead, feel free to pop on over to our Future Value Calculator.
Compound interest means earning interest not only on the initial principal amount but also on the accumulated interest from previous periods. It's essentially interest on interest, leading to faster growth of savings or investments over time compared to simple interest.
Compound interest benefits investors across the spectrum. Banks benefit from compound interest lending money and reinvesting interest received into additional loans. Depositors benefit from compound interest receiving interest on their bank accounts, bonds, or other investments.
Although the difference won't be much, it is better to opt for daily compounding. The interest amount in case of daily compounding will be slightly higher than the other options. This is governed by the principle: the shorter the compounding interval, the higher the interest.
Compound interest takes into account both interest on the principal balance and interest on previously-earned interest. Simple interest refers only to interest earned on the principal balance; interest earned on interest is not taken into account. To see how compound interest differs from simple interest, use our simple interest vs compound interest calculator.