The compound growth calculator is a handy device that helps you to compute the compound annual growth of an initial value when there are different compounding frequencies available to you. Read further to learn how to calculate compound growth and what is the compound growth formula.
If you would like to learn about and compute the Compound Annual Growth Rate, check our CAGR calculator created on this subject.
What is compound growth formula?
With the compound growth formula, you can estimate how much your investment or savings will grow over a certain time and financial specification.
The formula for annual compound interest is as follows:
FV = PV * (1 + r / m)ᵐᵗ
CG = FV - PV
PV- the initial balance or present value;
r- the annual interest rate;
m- the number of times the interest is compounded per year (compounding frequency);
t- the number of years;
FV- the future value of the initial balance; in our calculator, it is the final balance (learn more about it by our future value calculator); and
CG- compound growth.
How to calculate compound growth?
To make the calculator work, you need to fill the appropriate fields:
- Main properties
- Initial balance - the present value of your investment or savings;
- Interest rate - the interest rate expressed on a yearly basis;
- Term - the time frame the compounding growth is calculated for; and
- Compound frequency – in this field, you should select how often the compounding applies to your balance. Usually, the interest added to the principal balance daily, weekly, monthly, quarterly, semi-annually, or yearly. But you may set it as continuous compounding as well, which is the theoretical limit for the compounding frequency. In this case, the number of periods when compounding occurs is infinite.
- Additional deposits
- How much? - the amount you add to your balance;
- How often? - the frequency of the additional deposit;
- When? - the timing of the transaction of the additional deposit; and
- Growth rate of deposit - this option allows you to set the growth rate of the additional deposit, if any.
That's it! In a sec, our compound growth calculator gives you your results.
Compound growth calculator - the results
The two main results are:
- Final balance - the future value of your initial balance; and
- Total compound growth.
Moreover, you can make a more in-depth analysis of your balances through two different charts and a table:
- Bar chart - you can follow the balances of compound growth, where, if you choose higher than yearly compounding, you can see the additional growth due to the compound frequency;
- Pie chart - here you can find the final balance breakdown; and
- Table - here you can check the yearly compound growths and balances.
If you provide an additional deposit, we will give you your results for the compounded initial balance and compounded additional balance.
We will also show you their contribution to the total growth amount, namely, compound growth on the initial balance and compound growth on the additional deposit.
You should consider the compound growth calculator as a model for financial approximation. All payment figures, balances, and interest figures are estimates based on the data you provided in the specifications that are, despite our best efforts, not exhaustive.
For this reason, we created the calculator for instructional purposes only. Still, if you experience a relevant drawback or encounter any inaccuracy, we are always pleased to receive useful feedback and advice.
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