Enter the initial amount, the interest rate, the period and the monthly contribution to simulate the linear growth of your investment with simple interest. Results appear in summary cards, a month-by-month table, and charts.
Simple Interest Simulator
Result
Monthly Table
| Month | Monthly Interest | Total Invested | Total Interest | Accumulated |
|---|
How to Use the Calculator
- Enter the Initial Amount (the capital you already have to invest).
- Set the Interest Rate and choose whether it is monthly or annual.
- Choose the Period in months or years.
- If you want to simulate periodic contributions, enter the Monthly Contribution.
- Click Calculate to see the summary cards, charts, and detailed monthly table.
What Is Simple Interest
In simple interest, the return is always calculated on the initial principal, without adding accumulated interest to the calculation base. This produces linear growth over time.
The basic formula is:
J = P × i × t
And the total amount:
M = P × (1 + i × t)
Where P is the principal, i is the rate per period, and t is the number of periods.
Converting Annual Rate to Monthly Rate
In simple interest, the conversion is proportional:
imonthly = iannual ÷ 12
So 12% per year equals 1% per month in simple interest.
Practical Examples
| Principal | Rate | Period | Interest | Amount |
|---|---|---|---|---|
| $1,000 | 2% p.m. | 6 months | $120.00 | $1,120.00 |
| $5,000 | 12% p.a. | 2 years | $1,200.00 | $6,200.00 |
| $2,500 | 1.5% p.m. | 12 months | $450.00 | $2,950.00 |
Frequently Asked Questions
What is simple interest?
Simple interest is calculated on the initial principal only, without compounding. The formula is J = P × i × t, where P is the principal, i is the interest rate per period, and t is the number of periods.
What is the difference between simple and compound interest?
In simple interest, interest is always calculated on the original principal, producing linear growth. In compound interest, each period's interest is added to the balance and earns further interest — producing exponential growth that is far larger over long time horizons.
How do you convert an annual rate to a monthly rate in simple interest?
In simple interest, the conversion is proportional: monthly rate = annual rate ÷ 12. For example, 12% per year equals 1% per month.
What is the simple interest formula for the total amount?
The total amount M is given by M = P × (1 + i × t), where P is the principal, i is the rate per period, and t is the number of periods. Total interest is J = M − P = P × i × t.
When is simple interest most commonly used?
Simple interest is common in short-term situations such as bank discount notes, instalment payments, and penalty or late-payment calculations. For long-term investments, compound interest is typically used.
Read also…
