Comprehensive Calculator Guide
📋Overview
The Compound Interest Calculator is a powerful financial tool that helps you understand how your investment grows over time through compound interest. Compound interest is one of the most powerful forces in investing, where you earn interest on your previously earned interest.
🎯How to Use
- Enter the initial amount you want to invest
- Specify the monthly contribution (if any)
- Enter the number of years for investment
- Specify the expected annual return rate
- Click 'Calculate Return' to see results and graph
🔢Formula Used
A = P(1 + r/n)^(nt) + PMT × [((1 + r/n)^(nt) - 1) / (r/n)]💡Practical Examples
Example 1: Investment with initial amount only
If you invest 10,000 SAR at an annual return of 8% for 10 years, your investment will grow to about 21,589 SAR.
Example 2: Investment with monthly contributions
Starting with 5,000 SAR and adding 500 SAR monthly at 7% return for 15 years, you will have over 190,000 SAR.
❓Frequently Asked Questions
Q:What is the difference between simple and compound interest?
A: Simple interest is calculated only on the principal amount, while compound interest is calculated on the principal plus accumulated interest.
Q:How often is compound interest calculated?
A: In this calculator, compound interest is calculated monthly (12 times a year).
Q:Can I change the contribution frequency?
A: Currently, the calculator supports monthly contributions only, which is the most common option for investors.