The Power of Compounding: Annual Savings

See how much your money could grow!

This calculator can show you, if you save each year, what you can earn from the power of compounding and how much your money can grow over time. Try it now.

What You Invested
x
Rate of Return
=
Future Value
$100,000
x
5%
=
$105,000

This is good…but what happens next is where the magic lives! The following year, your interest rate will be applied to the larger balance (in this case $105,000) and even if it grows at a similar rate, you will earn more dollars than the prior year because you started with a higher balance.

Starting Balance
x
Rate of Return
=
Future Value
$105,000
x
5%
=
$110,250

This example shows that without contributing more, the rate of return earned you $250. Of course, $250 many not seem like much but over the course of many years, imagine the additional wealth compounding could bring – without you having to do anything more!

Check out our calculator below to see how the power of compounding can work for you.

To see what compounding can do when you continue to save every year, check out our other compounding calculator.

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Note: The calculation assumes compounding on an annual basis. Rates of return tend to fluctuate so you can expect to experience varying percentages every year you are invested. As return rates change, the future value of your investment will change; and, of course, changes to the amount contributed will affect the future value as well.

The Compounding Calculator is a tool for you to use in your financial planning. The results are based on the information provided by you, and Guided Choice is not responsible for any errors or omissions with respect to such information. The calculations provided should not be construed as financial, legal or tax advice. In performing these calculations, the Compounding Calculator makes certain assumptions that may change over time. Results and recommendations provide by the Compounding Calculator are not guaranteed.