A Tool to Understand Compound Interest Growth

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A new tool is available to help students visually appreciate the power of compound interest growth.  The math behind compound interest is visually demonstrated by the online  interest calculator.

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A compound interest calculator is used to calculate your earnings and more. It can take a lump sum of your money and compound it monthly over a period of time at an annual yield.

When your interest is compounded in your savings account, the more money you have the more you earn from your interest. The investment amount is the amount of your beginning investment.

For the interest rate, it is the annual interest rate of your investment. The rate of your return is dependent on the type of investment that you selected. For savings accounts at a bank, you may get as little as 1% but have a lower risk of loss of principal balances. The rate of return on investments can be varying. The compound interest that you will get is the interest on an investment’s interest and also the previous interest. You should check with your bank to see how often the interest is compounded on your investment. You should also see how many years it will take to get a compound interest for this investment. Compound interest is a powerful personal finance tool that can help you throughout the rest of your life. You can be rich by the time you retire if you begin saving at an early age. So it is better to start young then to start putting money for compound interest at an older age.

So if you are interested in doing compound interest and would like to see how much you are making, you should look into doing an interest calculator.

Additional References

Personal Finance Information – Bank of America

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