Calculator Online Compound Interest

[compound interest]

How to use a compound interest calculator for investments  

1. Fill in with the initial investment value.
2. Fill in the monthly amount invested.
3. Fill in the interest rate.
4. Fill in the period Where do you want to know the value of the return?.
5. Click on “Calculate”to get the answer

Example: Imagine an investment of R$ 1,000 (initial value) and the one with 1% of monthly income (interest ratehaving a monthly investment of R$ 1.000. Note that, for these parameters, you will invest R$ 13 thousand and will have R$ 809.33 in interest (result)!

How to use a compound interest calculator for loans

1. Fill in with the initial loan amount.
2. Fill in the loan interest rate.
3. Fill in the period that you want to know the interest rate.
4. Click on “Calculate”to get the answer

Example: Imagine that you have a loan of R$ 5,000 (initial loan amount). Your interest rate 4,99% is per month. See the calculation of compound interest in this case, for 12 months (period). In this case, there is no investment value. By entering the values and clicking "Calculate," you will have to pay. R$ 3,969.02 interest (plus the loan amount).

How do you calculate compound interest?

To calculate compound interest, we have a compound interest formula. It will help you understand how this calculation is performed. Check it out!

Compound interest formula – Explanation

Vf = Vi (1 + j) ^ p

Here's how the formula for calculating compound interest works:

    Vf = final value, that is, the result you want.

    I saw = initial value (amount deposited or borrowed).

    j = interest rate;

    p = period (of the investment or loan).

It's important to remember that you must use the same unit to calculate compound interest. So, if you have a calculation of 1% per month, for one year, use the unit 12 (months) for the period (p). 

What is compound interest?

Compound interest is also known as interest on interest, since its calculation for each month also considers the interest accrued in the previous month. Because of this, the rate can significantly increase in relation to investments or create a huge deficit in cases of debt. 

To better illustrate this compound interest rate, check out a table showing how to calculate compound interest installments:

Compound interest table

As you can see, compound interest is always calculated on the previous amount, already taking the interest rate into account.

What is the difference between compound interest and simple interest?

When calculating interest online, it's important to know what type of interest is being used: simple interest (with a fixed rate) or compound interest (interest on interest). Understanding the difference between these two types of interest will help you perform your calculation:

Simple Interest

• Payment is made to the creditor periodically (monthly or annually).
• Interest is the same over time, meaning the value does not change.
• These are fixed rates, as they yield the same amount over the period, regardless of the previous amount. 
• If analyzed, they may show losses due to inflation and a decrease in the percentage of return.
• If they are not paid, they lose value due to inflation.

Compound interest

• Payment to the creditor (in the case of investments) only occurs at maturity.
• It is an increasing rate and does not lose out to inflation, since it is calculated on the return on capital. 
• They appear as an upward curve towards capital. 
• Even if they are not paid, they remain valuable, as they accumulate in the total amount.

Where is compound interest used?

Want to know where compound interest calculations are used? Check out the main places that use this calculation:

• Compound interest in investments: it allows your money to grow more over a given period, resulting in a real gain. 
• Compound interest on loans: this is how the final amount you will pay in installments on the money you borrowed from the bank is calculated. 
• Compound interest in financing: if you finance a house or vehicle, the final calculation of installments is done with interest on interest. 
• Compound interest on credit card bills: for those who do not pay their bill on time, a compound interest rate will be applied to the final payment.

 Key questions about compound interest

[faq]