High Yield Savings Account Calculator Wealthfront

Compound Interest Formula:

\[ A = P \times (1 + \frac{R}{n})^{n \times T} \]

Principal (P):

USD

Annual Interest Rate (R):

decimal

Compounding Frequency (n):

per year

Time (T):

years

Maturity Amount (A):

Unit Converter ▲

Unit Converter ▼

From:	To:

1. What is the Compound Interest Formula?

The compound interest formula calculates the future value of an investment or savings account where interest is compounded periodically. It shows how money grows over time through the power of compounding.

2. How Does the Calculator Work?

The calculator uses the compound interest formula:

\[ A = P \times (1 + \frac{R}{n})^{n \times T} \]

Where:

\( P \) — Principal amount (initial investment)
\( R \) — Annual interest rate (in decimal form)
\( n \) — Compounding frequency per year
\( T \) — Time in years
\( A \) — Maturity amount (final amount)

Explanation: The formula calculates how much your investment will grow when interest is compounded at regular intervals over time.

3. Importance of Compound Interest Calculation

Details: Understanding compound interest is crucial for financial planning, investment decisions, and maximizing returns on savings accounts like Wealthfront's high-yield savings products.

4. Using the Calculator

Tips: Enter principal amount in USD, annual interest rate as a decimal (e.g., 0.05 for 5%), compounding frequency per year, and time in years. All values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: What is the advantage of compound interest?
A: Compound interest allows your money to grow faster because you earn interest on both your initial principal and the accumulated interest from previous periods.

Q2: How does compounding frequency affect returns?
A: More frequent compounding (daily, monthly) results in higher returns compared to annual compounding, as interest is calculated and added more often.

Q3: What is a typical interest rate for high-yield savings?
A: Rates vary but typically range from 0.5% to 5% APY (0.005 to 0.05 in decimal form), depending on market conditions and the financial institution.

Q4: Is this calculator specific to Wealthfront?
A: While designed for Wealthfront's high-yield savings accounts, the formula applies to any compound interest calculation with the same parameters.

Q5: Are there any fees or taxes considered?
A: This calculator shows gross returns before any fees or taxes. Actual net returns may be lower after accounting for account fees and tax implications.