Interest Calculator
Results
| Ending balance | $54,535.20 |
| Total principal | $45,000.00 |
| Total contributions | $25,000.00 |
| Total interest | $9,535.20 |
| Interest of initial investment | $5,525.63 |
| Interest of the contributions | $4,009.56 |
| Buying power after inflation | $47,042.54 |
- Contributions
- Initial
- Interest
Accumulation Schedule
- Contributions
- Initial Investment
- Interest
| Year | Deposits | Interest | Ending Balance |
|---|---|---|---|
| 1 | $5,000.00 | $1,250.00 | $26,250.00 |
| 2 | $10,000.00 | $2,812.50 | $32,812.50 |
| 3 | $15,000.00 | $4,703.13 | $39,703.13 |
| 4 | $20,000.00 | $6,938.28 | $46,938.28 |
| 5 | $25,000.00 | $9,535.20 | $54,535.20 |
How to Use the Interest Calculator
- Initial Investment: Enter the starting amount of your investment or savings.
- Contributions: Input any regular deposits you plan to make, either annually or monthly.
- Contribution Timing: Choose whether you add funds at the beginning or end of each period. Contributing at the beginning gives your money slightly more time to grow.
- Interest Rate & Compounding: Enter the nominal annual interest rate and how often it's compounded (e.g., monthly, annually). More frequent compounding leads to faster growth.
- Investment Length: Specify the total time you plan to let your investment grow.
- Tax & Inflation (Optional): Enter tax and inflation rates to see your after-tax growth and the future buying power of your investment.
Frequently Asked Questions
What is compound interest?
Compound interest is 'interest on interest.' It's the process where the interest you earn is added back to your principal, and then the next interest calculation is based on this new, larger amount. This causes your investment to grow at an accelerating rate over time.
Why does compounding frequency matter?
The more frequently interest is compounded, the faster your investment grows. For example, interest compounded monthly will result in a slightly higher ending balance than interest compounded annually, even with the same nominal interest rate.
How does inflation affect my investment's real value?
Inflation erodes the purchasing power of money over time. The 'Buying power after inflation' result shows you what your investment's future value would be worth in today's dollars, giving you a more realistic picture of your wealth.