See how your money grows over time with compound interest, monthly contributions, inflation adjustment, and tax drag.
| Year | Contributions | Interest | Balance | Real Value |
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Compound interest means you earn returns not just on your original investment (principal) but also on the interest already earned. Over time, this creates exponential growth — what Einstein reportedly called "the eighth wonder of the world."
A = P(1 + r/n)^(nt) — where P is principal, r is annual rate, n is compounds per year, and t is time in years. When you add regular contributions, each contribution begins its own compounding journey.
A nominal return of 8% with 2.5% inflation gives a real return of approximately 5.5%. Your purchasing power grows at the real rate — this is what you can actually buy with your future balance in today's money.
The US stock market (S&P 500) has returned approximately 10% annually on average over 100 years (7–8% after inflation). Diversified global equity portfolios have returned 7–9% nominally. Conservative bond-heavy portfolios typically return 4–5%.
More frequent compounding means slightly higher returns. The difference between monthly and annually is relatively small — from 8% nominal, monthly compounding gives ~8.30% effective annual rate versus 8.00% with annual compounding.