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

Tue, 05 May 2026 06:50:20 +0000

**How Compound Interest Can Grow $1,000 at 5% Annual Rate Over 3 Years—And Why It Matters Now** Curious about how even moderate returns can significantly impact savings over time? The number one question many U.S. investors ask is simple: *What happens if I invest $1,000 at an annual compound interest rate of 5%?* With steady growth and compounding, this amount climbs steadily—reaching nearly $1,157.63 after just three years. It’s a clear example of how time and reinvestment fuel long-term financial strength. Compound interest works by earning returns on both the original amount and previously accrued interest. In this case, each year’s gain is calculated on the full balance, accelerating growth over time. This principle makes even small, consistent investments vital for building wealth, especially in a market where dollar-cost averaging and automated savings are gaining traction. Why is this topic resonating now? Rising inflation and shifting economic conditions prompt many to seek proven, accessible ways to preserve purchasing power. While 5% isn’t extraordinary, it outperforms typical savings account rates and offers a predictable growth path—making it especially relevant for long-term planners, early savers, and those learning personal finance for the first time.