Investment Daily Interest Calculator

Daily Compound Interest Formula:

\[ A = P \left(1 + \frac{r}{365}\right)^{365 \times t} \]

Future Value (A):

Total Interest Earned:

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1. What is Daily Compound Interest?

Daily compound interest means that interest is calculated on your principal plus accumulated interest every day, leading to faster growth of your investment compared to simple interest or less frequent compounding.

2. How Does the Calculator Work?

The calculator uses the daily compound interest formula:

\[ A = P \left(1 + \frac{r}{365}\right)^{365 \times t} \]

Where:

\( A \) — Future value of investment
\( P \) — Principal investment amount
\( r \) — Annual interest rate (decimal)
\( t \) — Time in years
365 — Number of compounding periods per year

Explanation: The formula accounts for interest being added to the principal daily, which then earns more interest in subsequent periods.

3. Importance of Compound Interest

Details: Understanding compound interest is crucial for investment planning. Daily compounding can significantly increase returns over time compared to annual compounding, especially for long-term investments.

4. Using the Calculator

Tips: Enter principal amount in dollars, annual interest rate as a percentage (e.g., 5 for 5%), and time period in years. All values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: How does daily compounding compare to monthly or annual?
A: Daily compounding yields slightly higher returns than monthly, and significantly more than annual compounding, especially over longer periods.

Q2: Is this calculator accurate for real investments?
A: It provides theoretical results assuming constant rate and no additional contributions/withdrawals. Actual investments may vary.

Q3: What's the difference between APR and APY?
A: APR is the annual rate without compounding, while APY includes compounding effects. This calculator shows APY-equivalent results.

Q4: How does inflation affect these calculations?
A: This calculator doesn't account for inflation. For real returns, subtract expected inflation rate from the interest rate.

Q5: Can I use this for debt calculations?
A: Yes, the same formula applies to debts with daily compounding interest, though rates and terms may differ.