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Compound Interest — The Beauty of Exponential Functions

Albert Einstein is quoted as stating, “Compound interest is the eighth wonder of the world. He who understands it, earns it… he who doesn’t… pays it.”

Behold the beauty:

Let’s show you the power. Let’s say that you want to save $1000, and you have two bank options. Bank A will pay you a fixed $50 (5%) each year if you just put that $1000 into one of their accounts. Bank B will pay you 5% on the total amount you have in your account, allowing it to compound. Take look at the table below to see the difference this makes.


Compound interest nets you an extra $1800

Combining compound interest, thrifty spending, and investing towards retirement now is how you become a millionaire on a teacher’s salary. I’m not joking. Look below.

Invest toward retirement now.

You can play around with the compound interest calculator below.
Moneychimp Calculator