Estimate investment growth, monthly contributions, and interest earned over time.
A = P(1 + r/n)^(nt), where P is principal, r is the annual rate, n is compounding periods per year, and t is years.
$10,000 at 6% compounded monthly for 20 years grows to about $33,102.
Simple interest grows only the original principal, while compound interest grows on the principal plus all previously earned interest, producing exponential growth over time.
More frequent compounding earns slightly more. Daily compounding yields the highest return for any given nominal rate, followed by monthly, quarterly, semi-annual, and annual.
No. Interest and investment gains are typically taxable, so your after-tax return will be lower than the figures shown.
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