Compound Interest Calculator
Calculate how your investments grow over time with compound interest. See the power of compounding!
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Frequently Asked Questions
What is compound interest?
Compound interest is interest calculated on the initial principal and accumulated interest from previous periods. It's "interest on interest" that helps investments grow exponentially over time.
How is compound interest calculated?
Compound interest is calculated using the formula: A = P(1 + r/n)^(nt), where A is the final amount, P is principal, r is annual interest rate, n is compounding frequency, and t is time in years.
What's the difference between simple and compound interest?
Simple interest is calculated only on the principal amount, while compound interest is calculated on both the principal and accumulated interest, resulting in exponential growth over time.
How often should interest be compounded?
More frequent compounding (daily vs. annually) results in higher returns. Most savings accounts compound daily, while investments may compound monthly, quarterly, or annually.