Investment Calculator

How to Grow Your Wealth with Compound Interest

Compound interest is often called the eighth wonder of the world ? and for good reason. When your investment returns start generating their own returns, your wealth can grow exponentially over time. This investment calculator helps you visualize exactly how your money can grow with regular contributions.

The Power of Starting Early

The single most important factor in investment growth is time. An investor who starts saving per month at age 25 will accumulate significantly more by retirement than someone who starts at 35, even if the late starter contributes more each month. This is because compound returns have more time to work their magic. Use the calculator above to compare different starting ages and see the difference for yourself.

How Much Should You Invest Each Month?

Financial advisors typically recommend saving 15-20% of your gross income for retirement, including any employer match. If that is not feasible right now, start with whatever you can ? even per month makes a meaningful difference over 30 years. The key is consistency. Automate your contributions so you invest before you have a chance to spend.

Understanding Rate of Return Assumptions

The annual return rate you choose dramatically affects your projections. A diversified stock portfolio has historically returned 7-10% annually over long periods. Bonds typically return 2-5%. A balanced portfolio might return 5-7%. Always use conservative estimates for planning purposes, and remember that past performance does not guarantee future results.

The Impact of Fees on Your Returns

Investment fees can significantly erode your returns over time. A 1% annual fee might not sound like much, but over 30 years it can consume nearly 30% of your potential gains. When using this calculator, consider subtracting your expected expense ratio from the return rate to get a more realistic picture. Index funds and ETFs typically have the lowest fees, often under 0.10%.