1. What is Compound Interest Without Initial Investment?

This calculator computes the future value of regular contributions with compound interest, without any initial investment. It shows how consistent savings can grow over time through the power of compounding.

2. How Does the Calculator Work?

The calculator uses the compound interest formula for regular contributions:

Where:

• \( A \) — Future value of the investment
• \( C \) — Regular contribution amount
• \( r \) — Annual interest rate (as decimal)
• \( n \) — Number of compounding periods per year
• \( t \) — Time in years

Explanation: This formula calculates how regular contributions grow when interest is compounded at regular intervals over time.

3. Importance of Regular Contributions

Details: Regular contributions, even small ones, can accumulate significantly over time due to compound interest, making them a powerful wealth-building strategy.

4. Using the Calculator

Tips: Enter regular contribution amount, annual interest rate, compounding frequency, and time period. All values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: How does compounding frequency affect results?
A: More frequent compounding (e.g., monthly vs. annually) results in higher returns due to interest being calculated more often.

Q2: What's the difference between this and regular compound interest?
A: This formula calculates growth from regular contributions only, without any initial lump sum investment.

Q3: Are contributions made at the beginning or end of each period?
A: This formula assumes contributions are made at the end of each compounding period (ordinary annuity).

Q4: Can I use this for retirement planning?
A: Yes, this is excellent for calculating how regular retirement contributions can grow over time.

Q5: What if I want to include an initial investment?
A: You would need a different formula that combines both initial investment and regular contributions.