Paris is the capital of France.
Tokyo is the capital of Japan.
Calculating compound interest on an investment and determining the final value manually is a time taking process. The power of compounding calculator gives back accurate results in a matter of seconds. Hence saves time for the investor.
All one has to do is enter the three values. The investment amount, investment period (in years), and expected return (in %). The calculator returns the values of total investment, wealth gained, and maturity value along with a graph.
An investor can use the calculator to run multiple scenarios by tweaking the interest rate, investment amount, and the time of investment. He/she can compare the results from all the scenarios and find out the best plan to invest.
Reinvestment of earnings at the same rate of return to grow the principal amount every year is compounding. Compounding is a compelling concept. It is because the interest of your invested money is also earning interest.
The value of the investment keeps growing at a geometric rate (always increasing) rather than at an arithmetic rate (straight-line). Reinvestment of earnings at the same compound interest rate of return would help in continually growing the principal amount year-on-year.
The right advice is to start saving regularly and invest wisely. An early start would give the investor a higher compounding effect, and building wealth becomes easy.
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It helps if you know how much money you will need and when. If I invest this much at this rate how much money I will have in a few years. If you are planning to invest in a savings plan, you must know how much money you will be getting at the end of the policy term.
The power of compounding calculator can really motivate you to save and invest more. When you see how a small amount of money invested for the right amount of time can turn into a huge sum, you are unlikely to ignore the temptation to save more.