A bank offers a 5% annual interest rate compounded annually. If you invest $1000, how much will the investment be worth after 3 years?

Thu, 07 May 2026 00:26:50 +0000

**Why Delaying Growth on a $1,000 Investment at 5% Annual Compound Interest Matters in 2025** Wondering how $1,000 grows when invested at a steady 5% annual rate, compounded each year? This simple question reflects a growing interest in hands-off, reliable long-term wealth building—especially among curious US investors seeking stability in uncertain markets. The answer hinges on compound interest: interest earned is reinvested, generating growth exponentially over time. A bank offering a 5% annual interest rate compounded annually transforms $1,000 into over $1,157 after just three years. This isn’t just a math fact—it’s a proven pattern that resonates with those prioritizing predictable returns without drama or complexity. The magic lies in compounding: in year one, you earn $50; year two, $52.50; year three, $54.38—each payment feeding the next cycle. **Why This Rate Is Catching Attention Right Now**