An investment grows at an annual compound interest rate of 5%. If $1,000 is invested, what will be the amount after 3 years?

Tue, 05 May 2026 06:24:46 +0000

**How Compound Interest Transforms $1,000 Over Three Years — What You Need to Know** Ever wondered how a simple $1,000 investment quietly grows at a steady 5% per year, compounded annually? With modern financial awareness on the rise, more people are exploring how even modest sums can build meaningful wealth over time. The answer lies in compound interest — a powerful financial principle shaping financial decisions across the United States. When an investment grows at a 5% annual compound interest rate, the funds not only earn interest on the original amount but also on the interest already accumulated. This compounding effect accelerates growth, especially over several years. For someone starting with $1,000, this means progressive momentum that builds trust through transparency and real-world predictability. Here’s what happens in practice: If $1,000 is invested at exactly 5% compound interest annually, after three years the total value will reach approximately $1,157.63. This result emerges from a formula where each year’s interest builds on the growing principal. Understanding this process demystifies long-term wealth building and encourages informed financial planning.