Explainer · Personal finance
Compound interest: 10 years of saving vs 30
In a made-up example, Amy saves $200 a month for 10 years, then stops. Ben saves the same for 30 years. At an assumed 7% a year, Amy ends up with more. A one-minute look at how compound interest works, and why time matters.
Key points
- Amy saves from 25 to 35 and puts in $24,000. Ben saves from 35 to 65 and puts in $72,000.
- At 65, at an assumed 7% a year compounded monthly: Ben has about $245,000, Amy about $283,000.
- That's compound interest: the money you earn starts earning too. Amy's first dollars had 40 years to grow.
- Real returns go up and down and nothing is guaranteed. Fees, taxes and inflation shrink the numbers too.
Sources
- Illustration at an assumed 7% a year, compounded monthly (our own calculation, not a promise)
- Investor.gov compound interest calculator (SEC)
Educational · Not financial advice Made with AI tools (AI voices and visuals), checked by a person
