The interest credited to your policy can vary, but most IULs offer a guaranteed minimum interest rate to protect against market downturns. This is where compound interest plays a role.

Our comprehensive guide can show you the power behind compound interest and how you can calculate it to grow your wealth, savings, and portfolio.

Using the same values from the example above, a $10,000 deposit earning 2.00% interest that’s compounded would accrue $2,214 in interest over 10 years, for a total of $12,214.

Types of Interest There are two types of interest: simple and compound. Simple interest: a set amount that is a percentage of the principal and is paid out once every time period; for example ...

Different banks add—or compound—interest at different rates, known as the compounding frequency. Many banks compound interest daily, but some compound it weekly, monthly or even quarterly.

How quickly your money grows with compound interest depends on the interest rate and the frequency of compounding. Interest can be compounded daily, monthly, quarterly, or annually.

To calculate compound interest half-yearly, we have to multiply n by 2 and divide the rate by 2. Compounded quarterly: Every year has four quarters.

If the interest rate is 2.5%, r is 0.025. n is the number of times that interest is compounded per period. Most CDs compound interest daily, so n = 365.

Different banks add—or compound—interest at different rates, known as the compounding frequency. Many banks compound interest daily, but some compound it weekly, monthly or even quarterly.

In this example, subtract 1 from 1.096 to get 0.096. Multiply the compound annual growth rate expressed as a decimal by 100 to find the compound annual growth rate expressed as a percent.

This is the same calculation as you did in the last step, when a simple interest rate became compounded over several investment periods.The formula for total return is: (1 + Interest Rate ...