Visualize the power of compound interest with monthly contributions. See how small savings grow into massive wealth over time.

History

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    How to Use This Calculator

    The Eighth Wonder of the World

    Compound interest is often jokingly referred to as the “eighth wonder of the world” because of its ability to turn small, consistent efforts into massive results over time. Unlike Simple Interest (where you only earn money on your principal), Compound Interest means you earn interest on your interest.

    How it Works

    1. The Snowball Effect: In the beginning, growth looks flat. This is the “accumulation phase.”
    2. The Inflection Point: Once your interest payments exceed your contributions, your wealth begins to grow vertically.
    3. Time is Key: As you can see from the calculator, doubling your time usually does far more than doubling your rate of return.

    The Math Behind It

    The tool uses the following mathematical principle:

    $$ A = P \left(1 + \frac{r}{n}\right)^{nt} + PMT \times \frac{\left(1 + \frac{r}{n}\right)^{nt} - 1}{\frac{r}{n}} $$

    Where:

    • $A$ is the Future Value (the final amount).
    • $P$ is the Initial Principal (starting deposit).
    • $PMT$ is the Monthly Contribution.
    • $r$ is the Annual Interest Rate (decimal).
    • $n$ is the Compounding Frequency (12 for monthly).
    • $t$ is the Time in years.