Compound interest doesn't just add up linearly—it multiplies exponentially. Each period's interest earns its own interest, creating a growth curve that bends sharply upward. Drag the slider to see how dramatically time accelerates your returns.
Simple interest calculates returns only on the original principal, giving you a straight line of growth. Compound interest recalculates each period on the new total, meaning your interest earns interest. Over 30 years at 5%, $10,000 becomes $50,000 with simple interest but $43,219 with compound—except the compound actually wins because the calculation shows compound beats simple dramatically. The gap widens exponentially: after 10 years simple gives $15,000, compound gives $16,289. After 20 years simple gives $20,000, compound gives $26,533. After 30 years simple gives $25,000, compound gives $43,219. The longer you wait, the more powerful compounding becomes.
Final amount equals Principal times 1 plus rate raised to the number of periods—the exponent is what creates exponential growth, making interest earned on interest from previous periods far more valuable than simple interest alone.