What is the difference between simple interest and compound interest?
Simple interest is calculated on principal only. Compound interest adds earned interest back to the balance, so future interest is earned on both principal and past interest.
Can this calculator include recurring contributions?
Yes. You can add recurring contributions and choose whether they happen annually, quarterly, or monthly. You can also choose whether they are added at the start or end of each contribution period.
Why does compounding frequency matter?
Compounding frequency affects how often interest is added to the balance in compound mode. More frequent compounding generally results in a slightly higher ending balance, all else being equal.
What does total principal mean here?
Total principal is the sum of your initial investment plus all recurring contributions. It excludes interest, so you can see how much of the ending balance comes from money you added yourself.
When should I use simple interest instead of compound interest?
Use simple interest for basic interest calculations where earnings do not themselves earn interest. Use compound interest for savings, investments, and accounts where interest is periodically added back to the balance.
