A bank offers a compound interest rate of 5% per annum, compounded annually. How much will a $1,000 investment grow to in 3 years?

Wed, 29 Apr 2026 21:05:46 +0000

**How A Bank Offers a Compound Interest Rate of 5% Per Annum, Compounded Annually — And How Much That Grows to in Just 3 Years** At a time when everyday savers are reevaluating how early investments compound over time, a simple question surfaces again: How much will a $1,000 investment grow with a 5% annual compound interest rate, compounded each year? In an environment where financial literacy is growing, this query reflects a broader interest in understanding long-term wealth strategies. A bank offering a 5% annual interest rate, compounded once per year, means investors earn interest on both their initial deposit and the accrued balance — the fundamental mechanics of compounding. This formula creates momentum that amplifies returns over time, especially over multiple years. **Why Are Compounded Interest Rates Like This Gaining Attention Now?**
In recent years, rising awareness of savings resilience has driven more people to explore even small, consistent ways to grow wealth. Amid economic uncertainty and shifting consumer expectations, compound interest remains a trusted, transparent driver of long-term financial growth. The simple fact that $1,000 can grow to $1,157.63 over three years — a nearly 15% increase — captures attention as a tangible example of financial compounding in action.