Compound interest is the difference between the cash you contribute to an investment and the actual future value of the investment. In this case, by contributing just $2,000 per year with the annual contribution being increased by 3% per year (cumulative contributions of $150,006) you are able to accumulate $720,687 over 32 years. Compound interest makes up $570,682 of your future balance. <div id="chart1Container">Chart will load here</div> <script type="text/javascript">  </script> <ul><li><a href="inv01">How should I allocate my assets?</a></li><li><a href="inv02">Compare taxable vs. tax-free investment return</a></li><li><a href="inv03">What is the value of a bond?</a></li><li><a href="inv04">What is the return on my real estate investment?</a></li><li><a href="interest-calculator">What is the value of compound interest?</a></li><li><a href="inv06">What is the value of a call or put option?</a></li><li><a href="inv07">Taxable vs. tax-advantaged savings?</a></li><li><a href="inv08">What is my risk tolerance?</a></li><li><a href="inv09">What is the long-term impact of increased investment return?</a></li><li><a href="inv10">Certificate of deposit (CD) analyzer</a></li><li><a href="what-is-the-dividend-yield-on-a-stock">What is the dividend yield on a stock?</a></li><li><a href="inv12">How do expenses impact mutual fund returns?</a></li><li><a href="certificate-of-deposit-cd-laddering-strategy">Certificate of deposit (CD) laddering strategy</a></li><li><a href="share-certificate-analyzer">Share Certificate analyzer</a></li><li><a href="share-certificate-laddering">Share Certificate laddering strategy</a></li></ul><table class='pure-table pure-table-bordered' role='grid'><tr><th scope="col">Year</th><th scope="col">Beginning Balance</th><th scope="col">Savings @ 3.00%</th><th scope="col">Interest @ 7.00%</th><th scope="col">Ending Balance</th></tr><tr><td role="rowheader" scope="row">1</td><td>$45,000</td><td>$2,000</td><td>$3,290</td><td>$50,290</td></tr><tr><td role="rowheader" scope="row">2</td><td>50,290</td><td>2,060</td><td>3,665</td><td>56,014</td></tr><tr><td role="rowheader" scope="row">3</td><td>56,014</td><td>2,122</td><td>4,070</td><td>62,206</td></tr><tr><td role="rowheader" scope="row">4</td><td>62,206</td><td>2,185</td><td>4,507</td><td>68,899</td></tr><tr><td role="rowheader" scope="row">5</td><td>68,899</td><td>2,251</td><td>4,980</td><td>76,130</td></tr><tr><td role="rowheader" scope="row">6</td><td>76,130</td><td>2,319</td><td>5,491</td><td>83,940</td></tr><tr><td role="rowheader" scope="row">7</td><td>83,940</td><td>2,388</td><td>6,043</td><td>92,371</td></tr><tr><td role="rowheader" scope="row">8</td><td>92,371</td><td>2,460</td><td>6,638</td><td>101,469</td></tr><tr><td role="rowheader" scope="row">9</td><td>101,469</td><td>2,534</td><td>7,280</td><td>111,283</td></tr><tr><td role="rowheader" scope="row">10</td><td>111,283</td><td>2,610</td><td>7,972</td><td>121,865</td></tr><tr><td role="rowheader" scope="row">11</td><td>121,865</td><td>2,688</td><td>8,719</td><td>133,271</td></tr><tr><td role="rowheader" scope="row">12</td><td>133,271</td><td>2,768</td><td>9,523</td><td>145,563</td></tr><tr><td role="rowheader" scope="row">13</td><td>145,563</td><td>2,852</td><td>10,389</td><td>158,803</td></tr><tr><td role="rowheader" scope="row">14</td><td>158,803</td><td>2,937</td><td>11,322</td><td>173,062</td></tr><tr><td role="rowheader" scope="row">15</td><td>173,062</td><td>3,025</td><td>12,326</td><td>188,413</td></tr><tr><td role="rowheader" scope="row">16</td><td>188,413</td><td>3,116</td><td>13,407</td><td>204,936</td></tr><tr><td role="rowheader" scope="row">17</td><td>204,936</td><td>3,209</td><td>14,570</td><td>222,716</td></tr><tr><td role="rowheader" scope="row">18</td><td>222,716</td><td>3,306</td><td>15,822</td><td>241,843</td></tr><tr><td role="rowheader" scope="row">19</td><td>241,843</td><td>3,405</td><td>17,167</td><td>262,415</td></tr><tr><td role="rowheader" scope="row">20</td><td>262,415</td><td>3,507</td><td>18,615</td><td>284,537</td></tr><tr><td role="rowheader" scope="row">21</td><td>284,537</td><td>3,612</td><td>20,170</td><td>308,320</td></tr><tr><td role="rowheader" scope="row">22</td><td>308,320</td><td>3,721</td><td>21,843</td><td>333,883</td></tr><tr><td role="rowheader" scope="row">23</td><td>333,883</td><td>3,832</td><td>23,640</td><td>361,355</td></tr><tr><td role="rowheader" scope="row">24</td><td>361,355</td><td>3,947</td><td>25,571</td><td>390,874</td></tr><tr><td role="rowheader" scope="row">25</td><td>390,874</td><td>4,066</td><td>27,646</td><td>422,585</td></tr><tr><td role="rowheader" scope="row">26</td><td>422,585</td><td>4,188</td><td>29,874</td><td>456,647</td></tr><tr><td role="rowheader" scope="row">27</td><td>456,647</td><td>4,313</td><td>32,267</td><td>493,227</td></tr><tr><td role="rowheader" scope="row">28</td><td>493,227</td><td>4,443</td><td>34,837</td><td>532,506</td></tr><tr><td role="rowheader" scope="row">29</td><td>532,506</td><td>4,576</td><td>37,596</td><td>574,678</td></tr><tr><td role="rowheader" scope="row">30</td><td>574,678</td><td>4,713</td><td>40,557</td><td>619,949</td></tr><tr><td role="rowheader" scope="row">31</td><td>619,949</td><td>4,855</td><td>43,736</td><td>668,539</td></tr><tr><td role="rowheader" scope="row">32</td><td>668,539</td><td>5,000</td><td>47,148</td><td>720,687</td></tr></table><span style="padding-bottom:2px;background-color:#eee;line-height:1.45em;border-bottom:1px dotted;border-top:1px dotted;"><span style="color:#81A41E;font-size:100%;font-weight:700;"> FINANCIAL PLANNERS</span> <span style="color:#000;font-size:100%;font-weight:normal;">– <a href="http://www.plannerportal.com" target="_PP_WINDOW">Affordable Financial Planning Software</a> – <a href="http://www.plannerportal.com" target="_PP_WINDOW">www.PlannerPortal.com</a></span>  </span>