Compounding Calculator

What is Compounding?

So, what is compounding interest? Simply put, it's the process of earning interest on your initial investment, as well as on any interest that has accumulated over time. This means that the more time your money has to grow, the more it can potentially earn.

But why is this important? Well, compounding interest has the ability to turn a small amount of money into a large sum over time. It's the magic of compound interest that allows you to earn a return on your money without even lifting a finger.

Penny Doubled

To demonstrate the power of compounding the question is asked what would you rather have, $1 million right now or a penny doubled everyday for 30 days. Most people would say they want $1 million right now, however if you double a penny everyday for 30 days you will come out with $5,368,709.12. Isn’t that Amazing!

The doubling of the penny every day for 30 days is the equivalent of 100% interest a day which is clearly a hypothetical situation, but it demonstrates how powerful compounding can be. Compound interest really is the 8th wonder of the world!