An investment account grows at an annual interest rate of 5%, compounded annually. If the initial investment is $1,000, what will the account balance be after 3 years?

Sat, 02 May 2026 15:01:49 +0000

**1. How Fast Does $1,000 Grow at 5% Annual Interest, Compounded Annually?** Ever wondered how small sums can meaningfully grow with disciplined saving? A classic question shaping long-term financial habits is: what happens to $1,000 invested at a steady 5% annual interest, compounded each year? Right now, with rising conversations about savable income and passive growth, this question is resonating—especially among US readers planting seeds for future security. The answer lies in the power of compound interest, a foundational concept that turns modest investments into meaningful balances over time. Compounding means interest earns interest—not just on the original amount, but on the accumulated interest itself. When set at 5% annually and compounded yearly, even a $1,000 principal transforms steadily, with each year adding eco more to the next. **2. The Growing Popularity Behind 5% Annual Growth**