Compounding grows money

It is important to understand the power of compounding, why it pays to start investing early, and how to use an earnings calculator.

The length of time you invest is a key factor in meeting your financial goals. The earlier you start, the easier it will be to achieve them. Many investors lose out because they wait too long to get started or invest too little. If you don’t start early, it can be difficult to catch up. It pays to start investing as soon as you can, and to take advantage of the power of compounding.

Compounding occurs when your earnings on an investment are added to the amount you originally invested. As your total investment grows larger, your earnings have the potential to grow larger, too. (The same principle applies when you earn compound interest in a savings account.) How fast an investment grows over time depends on the rate of return you earn each year.

Use this calculator to estimate the future value of an investment based on different rates of return. Fill in the sections of the calculator, then click Calculate. If you want to try another example, hit Reset and start again.

Value of Investment

Note: The sooner you start investing, the more time your money has to grow and the harder your money works for you. Get started investing as early as you can!

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