See exactly how much your money grows over time, how much comes from your contributions, and how much from interest alone.
Compound interest is the most powerful force in personal finance. Unlike simple interest, which only pays on your initial deposit, compound interest pays interest on your interest. Over time, this creates an exponential growth curve that can turn modest savings into significant wealth.
For example, investing $10,000 at 7% annual return with $300 monthly contributions grows to approximately $198,000 after 20 years. Of that total, roughly $118,000 comes from compound interest alone, meaning your money earned more than you contributed.
The key factors that determine your compound growth are: your initial investment, your monthly contribution amount, the annual return rate, the compounding frequency (monthly compounding grows faster than annual), and most importantly, time. Starting 10 years earlier can double your final balance thanks to the compounding effect.
Historically, the S&P 500 has returned approximately 10% per year before inflation, or about 7% after inflation. A diversified bond portfolio returns roughly 4-5% per year. Use this calculator to model different scenarios and see how your savings could grow over time.
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