See how your investments can grow over time with the power of compound interest. Einstein called it the "eighth wonder of the world."
Enter the amount you're starting with. This is your principal—the lump sum you invest at the beginning.
The amount you plan to add each month. Consistent contributions significantly boost your final balance through dollar-cost averaging.
The expected annual return on your investment. The S&P 500 has historically averaged about 10% annually, or ~7% adjusted for inflation.
Compound interest is often called the "eighth wonder of the world" for good reason. Unlike simple interest, which only earns returns on your initial investment, compound interest earns returns on both your principal AND your previously earned interest.
The formula for compound interest with regular contributions is:
A = P(1 + r/n)^(nt) + PMT × (((1 + r/n)^(nt) - 1) / (r/n))Where: A = Final amount, P = Principal, r = Annual interest rate, n = Compounding frequency, t = Time in years, PMT = Regular payment amount.