The power of compound interest
Compound interest is interest earned on both your original money and on the interest it has already earned. Over long periods this snowball effect becomes the single most powerful force in personal finance — which is why starting early matters so much more than the exact amount you save.
How this calculator works
It compounds your balance monthly. Each month your balance grows by the monthly rate (annual return ÷ 12), and then your monthly contribution is added. The future value combines the growth of your starting amount with the growth of every contribution you make along the way.
A realistic note on returns
The "annual return" is an assumption, not a guarantee. Real investment returns vary year to year and can be negative. Historically, broad stock-market averages have been roughly in the high single digits before inflation, but past performance does not predict the future. Use a conservative figure and remember that inflation reduces what your final balance can actually buy.