When it comes to saving and investing, time can be even more valuable than money. That's thanks to the impressive power of compound interest, which means you earn a return not just on your money but also on the interest it has already accrued. Basically, you're earning interest on interest.
You can use compounding to your advantage by starting to invest early in your career. The sooner you begin, the more time your money has to grow. This can be particularly beneficial when saving for retirement and for other long-term goals.
If you invest $500 per month for 25 years, for example, you could wind up with about $400,000. But if you are able to invest that amount regularly for 35 years, you could wind up with roughly $900,000 — more than doubling your return, even though you're only investing $60,000 more.
Our compound interest calculator, below, will help you see how money compounds and how much your money can grow over time.
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