Inflation and bank fees are eating your savings. Here is how to fight back.
Compound interest is often called the 'eighth wonder of the world' for a reason. Unlike simple interest, where you only earn money on your initial principal, compound interest allows you to earn interest on your interest. It creates a snowball effect: your money grows, and then the growth grows. For example, if you invest $10,000 at a 10% annual return, you earn $1,000 in the first year. In the second year, you earn 10% on $11,000 (your new total), which is $1,100. Over 30 or 40 years, this exponential curve is what turns middle-class savers into millionaires. The key ingredient is time, not necessarily a huge starting capital.
The most important factor in compounding is not your return rate or your monthly contribution, but how early you start. Investing $500 a month starting at age 25 can yield significantly more wealth by age 60 than investing $1,000 a month starting at age 45. This tool helps you visualize that powerful curve so you can stop delaying and start investing today.
Calculate how your investments can grow over time with the power of compound interest.
