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Visualizing the Extraordinary Power of Compound Interest

A fundamental part of retirement that every investor must know.
  • 1 min Read

By Visual Capitalist

Visual Capitalist creates and curates enriched visual content focused on emerging trends in business and investing. Founded in 2011 in Vancouver, the team at Visual Capitalist believes that art, data, and storytelling can be combined in a manner that makes complex issues and processes more digestible. Covering high-growth opportunities and industries such as technology, mining, and energy, Visual Capitalist reaches millions of investors each year. Visual Capitalist’s infographics have been featured in The Wall Street Journal, The New York Times, Zero Hedge, Maclean’s, Gizmodo, The Vancouver Sun, and Business Insider.
Visual Capitalist creates and curates enriched visual content focused on emerging trends in business and investing. Founded in 2011 in Vancouver, the team at Visual Capitalist believes that art, data, and storytelling can be combined in a manner that makes complex issues and processes more digestible. Covering high-growth opportunities and industries such as technology, mining, and energy, Visual Capitalist reaches millions of investors each year. Visual Capitalist’s infographics have been featured in The Wall Street Journal, The New York Times, Zero Hedge, Maclean’s, Gizmodo, The Vancouver Sun, and Business Insider.

The power of compound interest is so compelling, that it’s been often called the “eighth wonder of the world”.

Find out why this concept is so fundamental to personal finance in the following infographic:

Visualizing the Extraordinary Power of Compound Interest

Think you already know how to use and calculate compound interest?

Check out this exercise created by Next Gen Personal Finance and see how you do. There are also many other free personal finance lessons available in the activities section of their website.

WHAT IS COMPOUND INTEREST?

Simply put, it’s interest on interest.

In the first compounding period, that interest is small – but in the long run, interest on interest is a big deal!

How interest compounds depends on three variables:

Interest Rate: The rate earned from savings or an investment
Time: The length of time money is left to compound
Taxes: The timing of taxation can make a big difference

LEARN MORE

Get free lesson plans and resources on personal finance from our co-founder Next Gen Personal Finance.

Be the first to see all future personal finance infographics by getting on Visual Capitalist’s free email list.

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