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See how your money grows over time with compound interest and regular contributions.
A = P(1 + r/n)^(nt) + PMT × [(1 + r/n)^(nt) - 1] / (r/n)
P = principal, r = annual rate, n = compounds/year, t = years, PMT = monthly contribution
Compound interest is interest calculated on both the initial principal and the interest already accumulated. This creates exponential growth — money earns interest on its interest.
More frequent compounding results in slightly higher returns. Daily compounding earns marginally more than monthly, which earns more than annual compounding.
Divide 72 by your annual interest rate to estimate how many years it takes for money to double. At 7% interest, money doubles in approximately 72/7 = 10.3 years.
Regular monthly contributions dramatically accelerate growth due to dollar-cost averaging and the compounding effect on each contribution. Even small amounts add up significantly over decades.
Historically, a diversified stock market portfolio has returned approximately 7-10% annually before inflation. Conservative bond-heavy portfolios return around 3-5%.