1. What is the Investment Growth Formula?

The investment growth formula calculates how much an investment will grow over time with compound interest. It accounts for the principal amount, interest rate, compounding frequency, and time period.

2. How Does the Calculator Work?

The calculator uses the compound interest formula:

For continuous compounding:

Where:

• \( A \) — Future value of investment
• \( P \) — Principal investment amount
• \( r \) — Annual interest rate (decimal)
• \( n \) — Number of times interest is compounded per year
• \( t \) — Time in years
• \( e \) — Euler's number (~2.71828)

Explanation: More frequent compounding leads to greater growth due to the exponential nature of the formula.

3. Importance of Compound Interest

Details: Compound interest is a powerful force in investing, allowing money to grow exponentially over time. Understanding this concept helps with financial planning and investment decisions.

4. Using the Calculator

Tips: Enter the principal amount, annual interest rate (as percentage), select compounding frequency, and time period in years. All values must be positive.

5. Frequently Asked Questions (FAQ)

Q1: What's the difference between simple and compound interest?
A: Simple interest is calculated only on the principal, while compound interest is calculated on principal plus accumulated interest.

Q2: How does compounding frequency affect growth?
A: More frequent compounding (e.g., monthly vs. annually) results in higher returns due to interest being calculated on interest more often.

Q3: What is continuous compounding?
A: The theoretical limit of compounding frequency, using Euler's number for exponential growth.

Q4: How accurate is this calculator?
A: It provides precise mathematical calculations but doesn't account for taxes, fees, or changing rates in real investments.

Q5: Can I use this for debt calculations?
A: Yes, the same formulas apply to compound interest on loans, though you'd enter the principal as a positive value.