How compounding works
Compound interest pays interest on your interest. The balance grows by P × (1+i)ⁿ, where i is the rate per compounding period and n the number of periods; regular contributions each grow from the moment they are added.
The time advantage
Because growth compounds, years matter more than the amounts involved. The same monthly contribution started ten years earlier commonly ends up worth roughly twice as much — the "interest earned" line above makes this vivid.
Frequently asked questions
What compounding frequency should I choose?
Match your account: most savings and investment accounts compound monthly or daily. The difference between monthly and daily is small; the rate and time matter far more.
Are the contributions invested at the start or end of each month?
They are added each period and then compound going forward — the standard future-value-of-a-series formula.
Does this account for taxes or fees?
No. It projects gross growth; taxes and fund fees will reduce real-world results.