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Quick Compound Calculator
What Is Compounding?
Compounding is earning returns on your original money plus the returns it already earned. Over time, the snowball effect accelerates growth—even if your monthly contribution stays the same.
Why Starting Early Matters
More compounding periods (months/years) = more growth. Starting earlier can beat investing larger amounts later.
Regular monthly contributions reduce the risk of bad timing and keep the snowball rolling.
The Math (light version)
If you invest a starting amount and add the same contribution each month, a simple model is:
- Future value of start:
start × (1 + r)^n - Future value of monthly adds:
contrib × ((1 + r)^n − 1) / r
where r is monthly return (annual ÷ 12) and n is # of months.
Simple Habits That Compound
- Automate a monthly deposit—treat it like a bill you pay yourself.
- Increase the contribution when income rises (e.g., +1–2% a year).
- Reinvest dividends and interest instead of taking them in cash.
- Avoid high fees and debt that can reverse compounding.
Set Targets You Can Keep
Pick a monthly number you can sustain. Compounding rewards consistency more than heroics. Even $50–$200 per month grows meaningfully over a decade or two.
Use Invorya’s investment calculator to estimate your future balance.
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FAQs
What exactly is compound interest?
It’s interest on interest. Your money earns a return, and then that return also earns a return in the next period—causing growth to accelerate over time.
Is 7% a realistic long-term assumption?
It can be a reasonable planning figure for diversified stock portfolios over long horizons, but actual returns will vary. Model a range (e.g., 4–8%) and revisit yearly.
Do monthly contributions beat annual lump sums?
Contributing monthly increases time in the market and reduces timing risk. If the lump sum sits in cash for months, you may miss compounding periods.
What if markets drop after I start?
Stick to the plan if your time horizon is long. Lower prices can help your new monthly contributions buy more shares, which compounds later.
