What is Compound Interest?

Compound Interest
Compound Interest

Compound Interest or Compounding calculates the initial principal x Interest, and then calculate the accumulated amount x interest again on the next year and so on and so forth. This is a calculation for Principal growth with interest over a period of time.

Compound Interest Calculation Table

Table below shows an example of compounding interest. Principal = RM5000, Interest per annum = 5%, No. of Year Compounding = 10 years

No. of YearsTotal Money
Example of Compounding Interest Calculation Table

From table above, we can see that after 1 year, the Principal amount RM5000.00 grows to RM5250.00 with interest rate 5% per annum. At year 2, the RM5250.00 grows to RM5512.50 with interest rate 5% per annum and so on and so forth. At 10th year, Principal amount RM5000 with interest rate 5% per annum, grows to total RM8144.47!

If you have time long enough, by using compound interest, you can grow small amount of money into big sum of money.

By using Compounding Calculator with Monthly Regular Saving, you can calculate and estimate your the total amount of your investment after a period of time. This calculator is useful as a financial planning calculator, such as for Fixed Deposit calculation, Retirement Saving Calculation and etc.