Compound Interest Calculator With Deposits

Compound Interest Formula:

\[ A = P \times (1 + r/n)^{(n \times t)} + PMT \times \left[\frac{(1 + r/n)^{(n \times t)} - 1}{r/n}\right] \]

Initial Principal (P):

USD

Periodic Deposit (PMT):

USD

Annual Interest Rate (r):

Compounds Per Year (n):

Time Period (t):

years

Future Value (A):

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1. What is Compound Interest With Deposits?

Compound interest with regular deposits calculates how your money grows when you earn interest on both your initial investment and the accumulated interest, while also making regular contributions to your investment.

2. How Does the Calculator Work?

The calculator uses the compound interest formula with deposits:

\[ A = P \times (1 + r/n)^{(n \times t)} + PMT \times \left[\frac{(1 + r/n)^{(n \times t)} - 1}{r/n}\right] \]

Where:

\( A \) — Future value of investment
\( P \) — Initial principal amount
\( PMT \) — Regular deposit amount
\( r \) — Annual interest rate (decimal)
\( n \) — Number of compounding periods per year
\( t \) — Time the money is invested for in years

Explanation: The formula calculates interest on both the initial amount and the accumulated interest, while also accounting for regular deposits made at each compounding period.

3. Importance of Compound Interest Calculation

Details: Understanding compound growth helps with financial planning, retirement savings, and investment decisions. Regular deposits significantly boost returns over time.

4. Using the Calculator

Tips: Enter initial amount, regular deposit amount, annual interest rate (as percentage), compounding frequency, and time period. All values must be non-negative.

5. Frequently Asked Questions (FAQ)

Q1: How often should interest compound?
A: More frequent compounding (daily > monthly > yearly) yields higher returns, though the difference diminishes with higher frequencies.

Q2: What's the effect of regular deposits?
A: Regular deposits can dramatically increase your final balance, especially over long periods.

Q3: Should I enter the rate as percentage or decimal?
A: Enter as percentage (e.g., 5 for 5%). The calculator converts it to decimal.

Q4: Can I use this for monthly savings plans?
A: Yes, set compounding frequency to match your deposit frequency (e.g., 12 for monthly).

Q5: What if I don't make regular deposits?
A: Just enter 0 for the deposit amount to calculate pure compound interest.