Why compound interest rewards starting early
Compound interest is often called one of the most powerful forces in personal finance, and the reason is structural: each period, you earn a return not just on what you originally put in, but on every dollar of interest or growth earned in every prior period. The longer that process runs, the more dramatic the difference between compound and simple growth becomes.
This calculator projects future value using:
FV = P × (1+r)ⁿ + PMT × (((1+r)ⁿ − 1) ÷ r)
Where P is your starting amount, r is the rate per compounding period, n is the total number of periods, and PMT is your regular contribution amount per period. The first term captures growth of your initial lump sum; the second captures growth of your ongoing contributions.
Why time matters more than most people expect
Because compounding is exponential rather than linear, the gap between starting early and starting late widens dramatically the longer the horizon. Two people contributing the same monthly amount at the same rate, but starting ten years apart, can end up with future values that differ by far more than ten years' worth of contributions — the difference comes from how much longer the early contributions had to compound.
A few important caveats
This calculator assumes a constant rate of return, which real markets never actually deliver — returns vary year to year, sometimes substantially. Treat the projected number as an illustrative long-run average outcome, not a guarantee, and remember that past or assumed average returns don't predict any specific year's performance.