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Calculate simple interest on loans or investments. See exactly how much interest accrues over time without compounding.
Initial investment amount
Annual percentage rate
Number of years
Interest Earned
$2,500
Total Value
$12,500
Principal
$10,000
I = P × r × t
I = Interest earned = $2,500
P = Principal = $10,000
r = Rate (as decimal) = 0.0500
t = Time (years) = 5
| Rate | Interest (1 Year) | Interest (5 Years) | Interest (10 Years) |
|---|---|---|---|
| 2.00% | $200 | $1,000 | $2,000 |
| 3.00% | $300 | $1,500 | $3,000 |
| 4.00% | $400 | $2,000 | $4,000 |
| 5.00% | $500 | $2,500 | $5,000 |
| 6.00% | $600 | $3,000 | $6,000 |
| 7.00% | $700 | $3,500 | $7,000 |
| 8.00% | $800 | $4,000 | $8,000 |
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Simple Interest is calculated only on the principal amount. The interest earned does not earn interest itself. It's straightforward and predictable, making it easier to understand and plan for.
Compound Interest is calculated on both the principal and accumulated interest. Over time, this creates exponential growth. Most savings accounts, bonds, and investments use compound interest, which is why they grow faster than simple interest over longer periods.
For short-term investments or loans, the difference may be minimal. However, for long-term wealth building, compound interest can significantly increase your returns. This is why starting early with investments is so powerful.
Sagery provides educational estimates, not financial advice. All projections are based on the assumptions you provide — actual results will vary. Consult a qualified financial advisor before making financial decisions.