Tom invests $5,000 in a savings account with 4% annual interest compounded annually. How much will the investment be worth after 3 years?

Sat, 02 May 2026 22:08:35 +0000

**How Tom’s $5,000 Savings Investment Grows with 4% Annual Compound Interest** Curious about what happens to a $5,000 deposit in a savings account earning 4% interest compounded each year? You’re not alone—this question reflects rising interest in small, smart financial habits, especially in a landscape where many are rethinking savings strategies. With inflation rising and everyday earning opportunities shifting, more U.S. adults are exploring reliable ways to grow money safely. One popular choice is placing savings in interest-bearing accounts that compound annually. Understanding how these investments grow helps users make informed, confident decisions. Tom sets out to invest $5,000 in a savings account with a 4% annual interest rate, compounded each year. This approach means interest is added to the principal at the end of each year, then earns interest on the updated balance moving forward. After just three years, this simple strategy delivers tangible returns—an accessible example of long-term wealth building. ### The Mechanics of Compounded Interest: Your Savings, Growing