# Online Compound Interest Calculators

## How the Rich get Richer – the Secret of Compound Interest

If you have ever wondered why the rich always get richer the reasons may surprise you. It often comes down to two things.

- They spend less than they earn
- They earn interest on top of interest (compound interest)

The first reason is quite obvious. If they spend less than they earn then they will always have more money. Hence, they will always get richer.

The second reason more or less turbo charges the first reason. Say for instance you have $10,000 in an investment account. If that account has an interest rate of 10% then after one year you will have $11,000. If you don’t spend any of that money after two years you would expect to have $12,000 after the interest is applied. However, you will actually end up with $12,100.

This is because you have earned interest on top of interest. I.e. the 10% interest was actually applied to the $11,000. This is an example of Compound Interest.

Now I bet you are thinking ‘so what. I only earned $100 more than I expected’. And that is correct, but what you need to consider is the long term effects of that extra money being compounded.

The figures below show what would happen to that $10,000 if it was invested for different lengths of time at a 10% interest rate.

- 10 years = $25,937
- 25 years = $108,347
- 50 years = $1,173,909
- 100 years = $137,806,123

As you can see the amounts of money increase by a staggering amount over time. However, realistically, you are unlikely to invest your money for 50 or 100 years unless you particularly keen on your descendents.

If however you were spending less than you earn and you also invested say $500 per month on top of that original one off $10,000 investment, your money would grow as follows.

- 10 years = $126,742
- 25 years = $730,393
- 50 years = $8,535,637
- 100 years = $1,009,366,604

You are reading that correctly. After 50 years you would have over 8 million dollars, and after 100 years you would have over one billion dollars! This is not a trick. The maths is accurate.

***This simple Rule of 72 Calculator is one of my favorites to understand how compound interest works. Online calculations are not really necessary for this calculator, do it in your head.

What is even more amazing is the huge effects a few small changes can have can have on the outcome e.g. If we use a 12% interest rate as opposed to a 10% interest rate in the example above, the numbers would grow as follows:

- After 10 years = $143,195 – this is 13% more than before ($126,742)
- After 25 years = $1,022,004 – this is 40% more than before ($730,393)
- After 50 years = $18,226,138 – this is 114% more than before ($8,535,637)
- After 100 years = $5,282,730,057 – this is 423% more than before ($1,009,366,604)

Now as you can imagine, if you are wealthy, investing $10,000 and then adding an additional $500 dollars to the account each month would probably not be very difficult. In fact many people may invest even more. This is why they get so rich.

I bet you’re now thinking, ‘I wish I was rich, so that I could take advantage of it’. The good news is you don’t have to be rich to benefit from compound interest. You could potentially gain from it by investing any amount you feel comfortable with. Try this out for yourself on a Compound Interest Calculator.

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how to work out compound interest?

i want to be able to work out what my compound interest will be for each month as it will be different because the principal will be different each month. A link to an online calculator would be good.

Cheers Shane

Compound Interest? Question – Math Help?

If you start with $2,000 and recieve 20% every month how much will you end up at the end of 12 months? (Also I want to know how to calculate it) – By recieveing 20% I mean the first month I make 20% on my initial 2,000, then I am left with 2,400…then the next month I make 20% on top of 2,400 which equals 2,880…etc How can I quickly calculate this and what is this called…because the “compounding interest” calculators online keep giving me obviously wrong answers.

Thanks for your help finance people!

Compounded Rate of Confusion: What would I have spent in 25 years if…..?

a) …I spend $ 5,916.00 an year from now on my elecricity bill and it kept increasing by 5% annually for 25 years?

b) …I spend $ 5,916.00 an year from now on my elecricity bill and it kept increasing by 9% annually for 25 years?

c) Please show me how you calculated. And tell me if I can get an answer using this online calculator:

Thanks,

very confused

I know that was confusing so forget all that and please consider the following simple question:

If my annual electricity consumption (kWh) = X

Price of electricity ($ / kWh) = Y

( Annual electricity bill = X * Y )

Annual increase on Y = 5%

Then what will be the sum of all my bills after 25 years?

compound interest calculator, please see details below?

Is there a calculator online that can do this? Let’s say I put $100 a month ‘every month’ for 5 consecutive years. If the money earns an APY of 5% compounded daily, how much money would I have after 5 years. This appears like a simple calculation, I searched some websites that do calculation based on annual deposits, but never found one that does with repeated monthly deposits. Please let me know, thanks in advance.

There sure is. Any ‘financial calculator’ can solve this problem in a jiffy. Alternatively, excel can do it too using the FV function. “FV” stands for future value. I need to clarify that the calculations below assume that the $100 goes into the account at the end of every month (rather than the beginning).

Let’s first assume approximate the answer by assuming that the interest is compounded monthly, rather than daily.

Future Value: FV = unknown

Present Value: PV = $0

Payment each period: PMT = -$100 (negative because this is money you are spending)

Rate per period: I = 5% / 12 periods each year = 0.4167%

Number of periods: N = 5 years * 12 periods per year = 60

Here is the syntax we will use with excel:

=FV(I, N, PMT, PV)

For the above example, we type in:

=FV(0.4167%, 60, -100, 0)

Our answer is $6800.68

So you saved $6000 over five years, and earned ~$800 interest.

Can this online calculator be used to calculate interest for money I loaned as well as for savings?

I found this online calculator, which is really great because I can adjust the frequency of compounding and also select the exact date that the calculation applies to. However, I am wondering if I can use this calculator to calculate the interest that I earn on my savings as well as the interest that I will charge to a person who I loan money to. Do the calculations pretty much work the same way for both purposes?

they are exactly the same type of calculation.

in the 1st case, the bank is paying you interest for your money,

in the 2nd case, it is the person to whom you have lent the money.

In the first field enter XY

Second field – 0

Third – 1

Fourth – Y

Click Calculate and you’ll get future value. Lets call it Z. Note it down. Go back to the form and…

In the first field enter Z

Second field – 0

Third – 1

Fourth – Y

Click Calculate and you’ll get future value. Note it down and continue the last step 23 more times.

Add all the figures and you have your answer.