With the compound interest calculator you can see how your invested capital develops and can easily calculate your earned interest. The higher the interest rate and the longer the term, the greater the effect. Now enter your data and find out how your money is developing.

## Why should I take advantage of compound interest?

If you use compound interest correctly, it can earn you a lot of money. To do this, you don’t have to work, but the money works for you. In my opinion, this is the ideal case. You make the money work for you, earning more than if you had a regular job.

For example, if you invest $10,000 for your child at birth with an interest rate of 8% and don’t touch the money, your child will have a million dollars in capital at age 60. For this amount, an employee has to work hard for a very long time. Let’s assume that George earns $2000 net per month. He would then earn $24,000 per year. To earn one million dollars, George would have to work $1,000,000 / $24,000 = **41.7 years**. In the other case, the money works all by itself, without any action on your part.

That is why it is important to understand how you can take advantage of the effect. That is why I have developed this compound interest calculator for you. Enter your data right now and see what happens!

## Try the compound interest calculator!

Play around with the compound interest calculator a bit. Try out how big the difference is when you extend or shorten the term by 5 years. Change the interest rate and look at the result. You’ll see that you don’t have to use that much money at all. Compound interest does the work all by itself.

Your inputs do not necessarily have to be realistic. But if you already have concrete dreams and wishes, you will see that they are usually not so far away. To do this, you formulate your goals and estimate the costs. Now use the calculator and calculate how much money you need to reach the goals.

Now you already know how much money you need approximately. What is lacking now is the right financial education to help you achieve your goals. How can you now make, save und invest money?

## Which investment is the right one?

If you’ve always wanted to know what the best investment has been in recent years, it’s best to look at how different investments have performed in comparison. There you can see a view of the last years and if necessary you can draw a conclusion for the future.

This involves the various classic forms of investment such as stocks, ETFs and bonds. You can trade these on the stock exchange and receive dividends or can profit from a price increase.

In addition, you will also find real estate and gold, which are considered very safe asset classes. On the other hand, peer to peer loans and an investment cryptocurrencies are much riskier.

## Explanation of terms

**Simple interest** is the interest paid on an investment. However, this is diverted from the investment and used for other purposes. So the size of the invested sum always remains the same.

Unlike simple interest, **compound interest** does not separate the interest received from the investment. The sum of the investment thus grows continuously over the years. The higher the interest rate and the longer the term, the higher the effect.

The **starting capital** is the money you want to invest at the beginning. With the compound interest calculator, you can see that the effect is greater with a long term. Therefore, you should try to invest as much as possible at the beginning.

The **monthly savings rate** means the following. You save a fixed amount each month, which is automatically debited from your account. This is, for example, a standing order for an ETF or shares.

The **savings period / investment period** is the time when you do not touch the money and let it work. The longer this period, the greater the expected compound interest effect.

The **annual interest rate** in percent is the expected return. With a high interest rate, you will have far more capital at the end of the savings period than with a low interest rate. As a rule, investments with a high return also involve greater risk.

With the **deposited amount** is composed of the initial capital and monthly savings installments. It is the sum of all the amounts paid in.

The **interest received** shows you how much interest you have received in total. Here’s the best way to see how interest works for you in the compound interest calculator.

The **final capital** indicates how much money you will have available at the end of the investment period. This is your savings goal. With it, you can then either fulfill a dream, or use it for your financial freedom.

## Example – compound interest calculator

Some values are already stored in the compound interest calculator to help you with the input. If you want to know what comes out of it, take a look at the following example. For this purpose, I have shown the result in this case once graphically.

Initial capital: $10,000 – monthly savings rate: $150 – savings period / investment period: 15 years – annual interest rate: 5%.

The compound interest calculator is a great tool to see how important it is to invest early on in your life.

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