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. It's a powerful way to grow your savings or investment over time, as interest continues to add to the principal amount, which in turn earns more interest.
How to Calculate Compound Interest?
The formula for calculating compound interest is:
A = P (1 + r/n)^(nt)
Where:
- P = Principal amount (the initial amount of money)
- r = Annual nominal interest rate (as a decimal)
- n = Number of times interest is compounded per year
- t = Time the money is invested or borrowed for, in years
Using this calculator, you can easily determine the future value of an investment or savings.
Why Use a Compound Interest Calculator?
A compound interest calculator is a useful tool to understand how your savings or investments can grow over time. By entering the principal amount, interest rate, time, and compounding frequency, you can get a clear picture of how much money you will have in the future, helping you make informed financial decisions.