Your Investment Details
Compounding Frequency
How often interest is calculated and added to principal. Monthly is most common for savings. Daily yields slightly more than monthly. The difference between annual and daily compounding at 7% over 30 years is ~5% more in final value.
Growth Visualization
Year-by-Year Breakdown
| Year | Deposited | Interest | Balance |
|---|
Final Amount
Total value including principal + all accumulated interest
Principal
Initial investment — your starting capital
Rate
Annual interest rate as a decimal (7% = 0.07)
Frequency
How many times per year interest compounds
Time
Number of years the money is invested
Einstein's Favourite Formula
Compound interest rewards patience above all else. At 8% annual return, $10,000 becomes $46,610 in 20 years — without adding a single dollar more. Rule of 72: divide 72 by your rate to find years to double. At 7%, your money doubles every ~10 years.
Time Is Your Greatest Asset
Compound interest creates a snowball effect that accelerates over time. Starting at 25 with $200/month at 7% yields approximately $520,000 by 65. Starting at 35 yields only $240,000. Those extra 10 years nearly double the result — the contributions barely changed, but time did.
Unlike simple interest (I = P × r × t), compound interest recalculates on the growing balance each period, leading to exponential rather than linear growth. The difference widens dramatically beyond 15 years.
Rule of 72: At 7% interest, your money doubles in roughly 72 ÷ 7 = 10.3 years. At 9%, only 8 years. At 6%, about 12 years. A useful mental shortcut for planning.
Benchmark Interest Rates
S&P 500 Index — ~7–10% (nominal)
Historical average ~10% before inflation, ~7% inflation-adjusted. Appropriate for long-term equity index investing models.
High-Yield Savings — 4–5%
Current online savings accounts in the US offer 4–5%. Lower risk, fully liquid, FDIC insured. Good for emergency funds and short-term goals.
Bonds / Fixed Income — 2–5%
Government and investment-grade corporate bonds. Lower returns, lower risk. Suitable for capital preservation or portfolio balance.
🌏 AU/CA Term Deposits — 4–5.5%
Australian and Canadian banks offer competitive term deposits. Often compounding quarterly or annually. Useful for medium-term goals.
Frequently Asked Questions
Formula & Calculation Method
Compound Interest (Standard)
A = P (1 + r/n)^(nt)A— Final amount (principal + accumulated interest)P— Principal — initial investmentr— Annual interest rate as a decimal (e.g., 7% → 0.07)n— Compounding frequency per year (monthly = 12, daily = 365)t— Time in years
Source: Standard financial mathematics (CFPB consumer education)
Rule of 72
t_double ≈ 72 / r(%)t_double— Approximate years to double the principalr(%)— Annual interest rate expressed as a percentage
Source: Heuristic; accurate for rates 4–12%. Derived from ln(2)/ln(1+r)
Continuous Compounding
A = P · e^(rt)e— Euler's number ≈ 2.71828r— Annual interest rate as a decimalt— Time in years
Source: Theoretical limit as n→∞; used in options pricing (Black-Scholes)
Authoritative Sources & Standards
Expert Insights & Research
Starting a $200/month investment at age 25 at 7% real return yields ~$520,000 by age 65. Delaying to age 35 yields ~$240,000 — a near-halving from 10 missed years.
A 1% higher fund expense ratio consumes 20–30% of a 30-year investment's total returns, compounding the erosion each year.
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For informational purposes only — not financial, medical, or legal advice. Results are estimates; use at your own risk. Full terms