Investment Calculator
Visualize how your money can grow over time with compound interest.
The Power of Compound Interest
Albert Einstein reportedly called compound interest the "eighth wonder of the world." It allows your money to earn interest on top of previously earned interest, leading to exponential growth over time.
Key Terms
- Starting Amount: The lump sum you invest at the beginning.
- Rate of Return: The annual percentage growth you expect (e.g., 7-8% for stock market average).
- Contribution: Regular money you add to the investment.
Example Scenario
If you invest $5,000 upfront and add $200 monthly for 20 years at a 7% return:
- Total Invested: $53,000
- Total Interest Earned: ~$56,000
- Final Balance: ~$109,000
Frequently Asked Questions
What is a good rate of return?
Historically, the S&P 500 has returned about 10% annually before inflation (or 7% after inflation). Savings accounts offer much lower rates (1-4%).