See how your investments grow exponentially over time with the power of compound interest. The most powerful force in wealth building.
The Rule of 72 gives you a quick estimate.
72 / 4 = 18 years to double
72 / 7 = 10.3 years to double
72 / 10 = 7.2 years to double
72 / 12 = 6 years to double
Compound interest is earning interest on your interest. Unlike simple interest (which only earns on the original principal), compound interest creates exponential growth. Albert Einstein allegedly called it "the eighth wonder of the world."
A = P(1 + r/n)nt
A = Final Amount | P = Principal | r = Rate | n = Compounding Periods | t = Time
| Year | Balance | Interest Earned | Total Interest |
|---|---|---|---|
| 0 | $10,000 | - | $0 |
| 5 | $14,693 | $4,693 | $4,693 |
| 10 | $21,589 | $6,896 | $11,589 |
| 20 | $46,610 | $25,021 | $36,610 |
| 30 | $100,627 | $54,017 | $90,627 |
Your $10,000 grows to over $100,000 - earning $90,627 in interest!
10 extra years of compounding = over $1 million more with the same monthly investment!
Compound interest is when you earn interest on both your original investment AND the previously earned interest. This creates exponential growth over time, making it one of the most powerful wealth-building tools. Your money earns money, and then that money earns more money.
The Rule of 72 is a quick way to estimate how long it takes to double your money. Simply divide 72 by your annual return rate. For example, at 8% annual return, your money doubles in approximately 9 years (72 / 8 = 9). It's a useful mental math shortcut for investors.
More frequent compounding slightly increases returns. Daily compounding earns a bit more than monthly, which earns more than annually. However, the difference is small. What matters most is the interest rate and time in the market.
Historical averages: S&P 500 returns about 10% per year (7% after inflation). Bonds average 5-6%. A balanced 60/40 portfolio averages around 7-8%. For conservative projections, use 7% to account for inflation and market variation.