The Earned Interest Calculator helps you estimate the potential growth of your investments over time, considering the power of compound interest. Compound interest is essentially "interest on interest," where the interest earned in each period is added to the principal, and then the next period's interest is calculated on this new, larger amount. This can significantly accelerate wealth accumulation compared to simple interest.
How it Works
The calculator uses the compound interest formula to project your investment's future value:
A = P (1 + r/n)^(nt)
Where:
A = the future value of the investment/loan, including interest
P = the principal investment amount (the initial deposit)
r = the annual interest rate (as a decimal)
n = the number of times that interest is compounded per year
t = the number of years the money is invested or borrowed for
In our calculator:
The Initial Deposit is your principal (P).
The Annual Interest Rate is r, which we convert from a percentage to a decimal by dividing by 100.
The Investment Duration is the number of years (t).
The Compounding Frequency determines n (e.g., Annually = 1, Monthly = 12, Daily = 365).
The calculator first computes the Total Balance (A) using the formula. Then, it calculates the Earned Interest by subtracting the initial deposit from the total balance:
Earned Interest = A - P
Use Cases
This calculator is useful for:
Estimating potential returns on savings accounts, certificates of deposit (CDs), money market accounts, and bonds.
Understanding how different interest rates and compounding frequencies can impact your long-term savings goals.
Planning for future financial milestones like retirement, a down payment on a house, or educational expenses.
Comparing different investment options.
By inputting your initial deposit, desired interest rate, investment timeframe, and compounding frequency, you can gain valuable insights into the power of compound interest and make more informed financial decisions.
function calculateEarnedInterest() {
var principal = parseFloat(document.getElementById("principal").value);
var annualRate = parseFloat(document.getElementById("annualRate").value);
var years = parseFloat(document.getElementById("years").value);
var compoundingFrequency = parseInt(document.getElementById("compoundingFrequency").value);
var resultDiv = document.getElementById("result");
if (isNaN(principal) || isNaN(annualRate) || isNaN(years) || isNaN(compoundingFrequency)) {
resultDiv.innerHTML = "Please enter valid numbers for all fields.";
return;
}
if (principal < 0 || annualRate < 0 || years < 0) {
resultDiv.innerHTML = "Principal, rate, and years cannot be negative.";
return;
}
var rateDecimal = annualRate / 100;
var totalBalance = principal * Math.pow((1 + rateDecimal / compoundingFrequency), (compoundingFrequency * years));
var earnedInterest = totalBalance – principal;
if (isNaN(totalBalance) || isNaN(earnedInterest)) {
resultDiv.innerHTML = "Calculation error. Please check your inputs.";
return;
}
resultDiv.innerHTML = "Earned Interest: $" + earnedInterest.toFixed(2) +
"Total Balance: $" + totalBalance.toFixed(2) + "";
}