It will take approximately 4.6 years to grow $5,000 to $7,500 if it is invested at 8% compounded semiannually.
- It will take 10.14 years for $5,000 to grow to $7,500 if it is invested at 8% compounded semiannually.
- However, if it is compounded monthly, it will take a much longer time, 729.84 years.
- This is because the interest is applied more frequently with monthly compounding, resulting in a smaller increase each time but a much larger overall increase in the long run.
- In short, while monthly compounding may seem like a better option due to more frequent interest application, the difference in time to reach your goal is significant.
- Semiannual compounding offers a much faster way to reach your target amount.