What is compound interest?

Compound interest means earning returns on both your original principal and all previously accumulated interest or gains. Over time this creates exponential growth — your money earns money on money. Albert Einstein reportedly called it the eighth wonder of the world.

What is the Rule of 72?

Divide 72 by your annual return rate to estimate the years needed to double your money. At 6% returns, money doubles every 12 years. At 9% returns, it doubles every 8 years. It works for any compounding rate.

How much does investing $500 per month grow to?

At a 7% annual return over 30 years, $500 per month ($180,000 total contributed) grows to approximately $567,000 — meaning compound growth adds about $387,000 on top of your contributions, more than doubling your money.

Compound Interest Calculator — Investment Growth Visualizer

Why starting early beats starting big

Compound interest is often called the eighth wonder of the world. An investment of $10,000 at 8% becomes $46,610 after 20 years — without adding another penny. Add $500/month and it becomes $305,000.

The Rule of 72: divide 72 by your annual return rate to estimate how many years it takes to double your money. At 8%, your money doubles every 9 years. Starting 10 years earlier gives you one extra doubling — meaning twice as much at retirement.

Sources

Bank of England — Bank Rate— UK benchmark
Federal Reserve — Selected Interest Rates— US benchmark

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Why starting early beats starting big