When you make an investment in stocks, bonds, ETFs, cryptocurrencies, what you really want to know is how much this will be worth in a few years time, given an average percentage increase YOY (year on year).
While it may seem very straightforward to calculate the interest you get on your investment over the years, a lot of people miss the concept of compounding interest. Compounding interest is when after a period of say 1 year, you make 10% on your investment and then you reinvest that 10% back into the same investment. That means that next year, if the investment grows 10% again, it is growing 10% on a larger investment than last year.
Each year, this "compounds" and is known as "compounding interest". This makes calculating your return on a 30 year investment in an ETF that increases an average of 8% per year a bit more complicated when you want to take this compounding effect into account. This tool will simplify that process for you.
This calculator uses dollars for the illustration, however this calculator can be applied to any currency.
Starting with an investment of , invested over the course of years at an interest rate of % per year, while adding every year after your interest rate has been applied.
After years your investment will have grown to .