Compound interest is the eighth wonder of the world. Those who understand it, earn it. Those who don't, pay it.
Investing $5,000 at age 25 vs. 35 can yield twice the outcome by retirement — without changing any other variable. Time is the only truly non-renewable resource in investing.
Moving from a 3% savings account to a 5% return sounds small, but over 30 years the difference compounds to tens of thousands of dollars. Small improvements matter enormously.
Adding just $100 a month to a $5,000 investment at 7% turns $5,000 into $122,000 over 30 years instead of $38,000. Each recurring contribution starts its own compounding journey.
Simple interest pays a flat rate on your original principal every year. Compound interest reinvests those earnings — so each year the base grows. The divergence is slow at first, then stunning.
| Year | Simple (7%) | Compound (7%) | Advantage |
|---|
Starting with $10,000. No additional contributions.
Divide 72 by your annual interest rate to find roughly how many years it takes to double your money. No calculator needed — a surprisingly accurate mental shortcut.
Each doubling event is marked in red. Adjust the parameters below to match your situation.