Compound Interest Frequency
Compounding frequency refers to how often interest is added to your investment or savings. The more frequently interest is compounded, the faster your money grows.
Common Compounding Frequencies
| Frequency | Times Compounded Per Year |
|---|---|
| Annually | 1 |
| Semiannually | 2 |
| Quarterly | 4 |
| Monthly | 12 |
| Daily | 365 |
How Frequency Affects Growth
Example: $1,000 at 5% for 10 years:
Annually: $1,628.89
Semiannually: $1,638.62
Quarterly: $1,643.62
Monthly: $1,647.01
Daily: $1,648.66
Annually: $1,628.89
Semiannually: $1,638.62
Quarterly: $1,643.62
Monthly: $1,647.01
Daily: $1,648.66
The difference grows with higher rates, longer time, and more frequent compounding.