Compound Interest
InvestingInterest calculated on both the initial principal and the accumulated interest from previous periods — growth on growth.
Example
Example: You invest $5,000 at 8% annual return. After year 1, you have $5,400. In year 2, you earn 8% on $5,400 (not just $5,000), giving you $5,832. After 30 years with no additional contributions, your original $5,000 grows to $50,313 — over 10x your investment. Add $200/month and it becomes $329,000. Use our compound interest calculator.