Question 1

How does compound interest work?

Accepted Answer

Compound interest means you earn interest not only on your initial capital, but also on the interest accumulated in previous periods. Over time, this creates exponential growth — often called the eighth wonder of the world.

Question 2

What is the difference between beginning and end of period contributions?

Accepted Answer

At the end of the period, your contribution earns interest starting from the next period. At the beginning of the period, it earns interest immediately within the same period, resulting in slightly higher total returns.

Question 3

What is the difference between nominal and effective rate?

Accepted Answer

A nominal rate is simply divided by the number of periods. An effective rate accounts for compounding within the year. For example, 12% nominal annual = 1% monthly, while 12% effective annual ≈ 0.95% monthly.

Question 4

Can I start with zero savings?

Accepted Answer

Yes. Set the initial capital to zero and enter a periodic contribution. The calculator will show how much you can accumulate just by saving regularly with compound interest.

Compound Interest Calculator

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