# Calculate compound interest | Free template

Calculate compound interest is a free template to calculate what an investment in capital assets gives in future value after a chosen number of periods when the compound interest effect has been taken into account.

Compound interest rate effect means that a capital investment in interest-bearing assets or assets which provide other form of income is growing at a faster rate per period than the first interest payment. The compound interest rate effect means that you get interest rate or return also on the interest rate or yield obtained provided that such return is reinvested. The compound interest rate effect is larger the more times return is capitalized over a given period of time.

The impact of the compound interest rate effect is limited by the fact that you must pay capital tax on capital income at certain times during your investment horizon. If you save in a regular bank account, you must pay tax on received interest at the end of each calendar year, the banks provide statements of interest that you have received and the interest income is then stated in your declaration.

Using this model to calculate compound interest, you can get answers on how much your capital has grown at a future date based on a given interest rate or growth rate that you specify. You will notice that your money will grow to large amounts in some years. If you invest $1 in 30 years at an average rate of 5 % without regard to tax, this investment will grow to $4.32.

Remember that the fewer times you have to pay tax on capital income during the period the higher your total income after tax will be all other things being equal.

**Updated: **01-01-2015 | Created by All-templates.biz

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