Compound interest calculator: Visualize the power of your investments

When we start exploring the world of investing or try to figure out what type of investment suits us best, we often come across the term compound interest—a concept frequently referred to as the eighth wonder of the world. But is it really that powerful? The truth is, it's not an exaggeration: it has generally become a key tool for growing your money over time. That’s why we’ve prepared this article to help you plan your financial future more clearly with our compound interest calculator.

Compound Interest Calculator

How to use our compound interest calculator

Using our calculator is truly simple. It doesn’t require complex calculations or spending hours searching for data. All you need to do is enter information for “initial capital,” “annual interest,” “years,” and finally, the “annual contribution.”

This way, the calculator itself will apply the formula and provide you with the necessary data and explanations.

How is compound interest calculated?

The general formula is:

• A = P (1 + r/n) ^ nt

Where:

• A: final amount
• P: initial capital
• r: annual interest rate
• n: number of compounding periods per year
• t: number of years

Although the formula may look technical, you don’t need to master it to benefit from it—our compound interest calculator handles everything for you.

Why is it key to growing your money?

Unlike simple interest, where interest is calculated only on the initial capital, compound interest adds previously generated interest into the calculation each period. For example:

Let’s say you invest €1,000 at 5% annually. After one year, you’ll have €1,050. However, in the second year, the 5% applies to the €1,050—not just the original €1,000.

That said, it's important to understand that the value of compound interest isn’t just about the return—it’s also about time. For an investor, it’s wise to start as early as possible. Why? Because the more time your investment has, the more it can multiply without requiring large contributions from the start.

This principle forms the basis of many strategies, such as financial independence or future planning through retirement savings. Additionally, it’s very useful for investment funds or crowdlending platforms, like Inversa.

Products where you can take advantage of compound interest

The key to compound interest lies in continuous revaluation. Thanks to this, it becomes an ideal option for the following products:

• Investment funds that automatically reinvest returns.
• Pension plans with annual reinvestment of earnings.
• Crowdlending platforms like Inversa offer options to reinvest earned interest into new promissory notes or similar products, maximizing long-term returns.
• Treasury bills. By reinvesting each maturity, you can build a staggered capitalization strategy.

Additionally, in our articles “Crowdlending: What it is, how to invest, and everything you need to know” and “Is it safe to invest in Treasury bills? What risks exist?” we dive deeper into these types of investments so you can understand all the details.

What can you do today to benefit from compound interest?

The most important step to start benefiting from compound interest is to remember that the best time to start is as soon as possible, even with small amounts. It’s crucial to understand that compound interest rewards consistency and time—not just the initial capital.

At Inversa, we recommend that you don’t withdraw the interest, and instead, let time work in your favor. On our platform, you can easily configure automatic reinvestments to optimize your returns. That’s why we encourage you to try our compound interest calculator and to contact us with any questions you may have.