Calculate how your savings or investments might grow over time with the power of compound interest.
Investment Strategy
Financial Projection
Future Value$31,998
Total Interest Earned$9,998
Total Invested$22,000
Purchasing Power (Adj. Inflation)$23,810
Investment Projection
Note: This projection uses the standard CAGR (Compound Annual Growth Rate) formula. Actual market returns vary year-over-year.
About this calculator
Overview
Compound interest is interest calculated on the initial principal, which also includes all of the accumulated interest from previous periods on a deposit or loan. Thought to have originated in 17th-century Italy, it can be thought of as 'interest on interest,' and will make a sum grow at a faster rate than simple interest, which is calculated only on the principal amount.
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Pro Tips
What is compound interest?: Compound interest is the interest on a loan or deposit calculated based on both the initial principal and the accumulated interest from previous periods.
How does inflation affect my savings?: Inflation reduces the purchasing power of your money over time. While your nominal balance grows, the actual amount of goods you can buy may decrease if your return is lower than inflation.
How important is time?: Time is the most critical factor in compound interest. Starting just a few years earlier can exponentially increase your final wealth due to the geometric nature of the growth curve.
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Fun Facts
"Albert Einstein famously called compound interest the "eighth wonder of the world.""
"The 'Rule of 72' is a quick way to estimate doubling time: divide 72 by your interest rate."
"Most savings accounts compound monthly, while most corporate bonds compound semi-annually."
