# Compound Interest Computer

- This compound interest calculator shows how your investment grows over time.
- With our compound interest calculator, you can visualize the powerful effect of compound interest and see how your investments and savings grow steadily over time.

### What is compound interest?

**"Compound interest" is a financial calculation method. It not only calculates the interest generated by your principal, but also adds these interests to the principal to calculate new interest together, forming a compound interest effect. **

### Analysis of compound interest formula

#### FV = PV(1 + i)^{n}

**FV (Future Value): Future value, that is, the expected value of your investment at a certain point in the future.**

**PV (Present Value): Present value, that is, your current investment amount or principal.**

**i: annual interest rate or expected annual return.**

**n: The number of investment periods, usually in years.**

### The powerful effect of compound interest

**For example: principal 100, annual interest rate 20%.**

| First year | Second year | Third year |
---|

Compound interest | 100 * (1+20%) = 120 | 120 * (1+20%) = 144 | 144 * (1+20%) = 173 |

Simple interest | 100 + (100*20%) = 120 | 120 + (100*20%) = 140 | 140 + (100*20%) = 160 |

**From this example, we can see that the effect of compound interest increases over time. The investment return in the second year is 4 more than the first year, and the third year is 4 more than the second year That’s 13 more. That’s the power of compound interest, your investment returns get better and better over time.**