calculate the interest on interest, or compound interest of your savings
interest rate (%)
period (years)
year 110,00050010,500
year 210,50052511,025
year 311,02555111,576
year 411,57657912,155
year 512,15560812,763
year 612,76363813,401
year 713,40167014,071
year 814,07170414,775
year 914,77573915,513
year 1015,51377616,289

Compound interest calculation

Interest on interest is also called cumulative or compound interest. If you put your money in a savings account, you get every year a certain amount of interest paid. If you do this additional amount in your savings account let alone, the capital increase, and the next year you will receive more interest than the previous. This cumulative effect is called compound interest.

an example:

You invest $ 10,000 in an investment with capitalization, with an annual interest rate of 5%. After 1 year you get 500 euros in interest, and grow your capital to 10500 euros. The 2nd year increases the capital again by 5%, but that is 10,500 x 0.05 = 525 euros and growing your capital to 11 025 euros.

the interest-on-interest effect goes exponentially:

The capital growth proceeds exponentially. The exponential 'interest-on-interest "effect will only start playing if the duration is long enough. The doubling time for an investment to 7.5% is 10 years. This means that your investment doubled in value every 10 years.

a savings account: safe investment?

The traditional savings account brings these days not much. Worse still, save in a savings account is not inflation-proof. This is to say that inflation is greater than the yield of your interest, and your investment is actually worth less. If you can spare some time for capital and want to invest, so can you better start looking for other "safe" investments, such as bonds or other investments with capital guarantee. If you like the interest-on-interest effect would benefit, the interest is capitalized. The annual interest is not paid, but will be added to your invested capital.

Attention: The real interest rate is equal to the interest rate minus inflation, bring it always will be, if you are the real return on your investment is to calculate!

privacy statement |