Investment Interest Simulator
Visualize how your investments could grow over time with compound interest.
Understanding Compound Interest
Compound interest is the interest you earn on both your initial investment and previously earned interest. Over time, this can lead to exponential growth of your investment, often referred to as the "snowball effect" of investing. The earlier you start, the more time your money has to compound and grow.
Investment Tips
- • Start early to maximize compound interest benefits
- • Consistently contribute to your investments
- • Diversify your investment portfolio
- • Consider your risk tolerance when choosing investments
- • Reinvest dividends when possible
- • Review and rebalance periodically
Common Scenarios
The Power of Time
Time is one of the most powerful factors in investing. Due to compound interest, even small regular investments can grow significantly over long periods. For example, $100 monthly invested at 7% annual return can grow to over $120,000 in 30 years, despite only contributing $36,000 directly.
Understanding Returns
The annual return rate significantly impacts long-term results. While stocks have historically averaged 7-10% annual returns (S&P 500), actual returns vary yearly. Conservative investments like bonds typically return 2-5%. Consider inflation (historically 2-3% annually) when planning your investment strategy.