Calculate the future value of your investment given your initial investment, expected yearly return, total time of investment, and any additional contributions.
Investment Calculator Interest
Investments typically use the concept of compounding interest in order to accrue value and grow exponentially over time. Compounding interest means that after you earn interest, you can than earn interest on that interest….It sounds a little funny, but think of it this way. You earn a certain interest over a year. Than the following year you have more money, and you can earn interest on all of the money you have.
Return on Investment Calculator
This interest is also often referred to as the return on investment, sometimes shortened to ROI. This means exactly what it sounds like, it’s home much money you earn on a certain investment over a certain amount of time.
In the investment world ROI is the holy grail of terms. Everyone relies on this key performance metric to determine how well there investments performed. Some companies even do shady tactics in order to artificially raise this number and keep their clients satisfied.
401 K and IRA
So how does this relate to retirement savings accounts? Well this interest is the backbone of all investments, so it works the exact same way. With the exception that the retirement savings are often put in low risk accounts that have a lower ROI than other investments.