Compounding Calculator
Forecast and understand your predicted wealth with our free-to-use compounding calculator.
How To Use Our Compound Interest Online Calculator
But What Actually Is Compound Interest?
Also known as ‘interest on interest’, compound interest speaks to the concept of investing your money and re-investing the interest earnt on that money. Combining regular, consistent investing over a long period of time with the power of compound interest can be incredibly effective in growing your wealth sustainably (and rapidly).
Examples of investments where the interest can be compounded include:
- I.S.A. (UK)
- Stocks that pay dividends
- Investing in cryptocurrencies
- Accounts for savings
- Accounts in the money market
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If you want to grow your wealth, understanding compound interest is essential. Albert Einstein is said to have described compound interest as the world’s eighth wonder. The concept involves earning a return not only on your original savings but also on the accumulated interest that you have made on the past investment of your savings.
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For support in understanding how to develop and use a compound interest growth strategy to increase your wealth, book a bespoke investment strategy session with our trading consultants.
FAQS
Here are some of our most frequently asked questions about our compound calculator and how it is works.
We recommend starting with a minimum of £2,000 and a monthly minimum commitment of £100. You don’t need to trade or invest this money straight away. In fact, we advise practising your commitment to contributing a specific amount of money each month towards growing your wealth.
Interest can be compounded in savings accounts and investments at the beginning or end of the compounding period. Suppose you want to include additional deposits or withdrawals in your calculation. In that case, you can do so at the beginning or end of each period – daily, monthly, quarterly, half-yearly, and yearly. Our compound interest online calculator will help you practice this and see the wealth growth possible if you commit to it.
Compound interest accelerates the growth of your assets. It allows you to grow a sum of money faster than with simple interest because you will earn returns not just on the money you invest but the returns at the end of each compounding period. This means you won’t need to save as much money to achieve your objectives! Remember, saving money is not the goal here. Growing and multiplying it is the goal, and compounding your investments will do this.
After compounding, the effective annual rate is the rate of interest you receive on your investment. When interest compounds, the effective annual rate rises above the nominal yearly rate. The higher the effective annual interest rate, the more times the interest is compounded within the year.
