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 $18,000 per year with the annual contribution being increased by 3% per year (cumulative contributions of $508,367) you are able to accumulate $1,089,192 over 20 years. Compound interest makes up $580,825 of your future balance. <div id="chart1Container">Chart will load here</div> <script type="text/javascript"> <!-- var myChart1 = new FusionCharts( "Pie2D", "myChart1Id", "100%", "100%", "0", "1" ); myChart1.setXMLData("<chart showValues='1' showFCMenuItem='0' decimals='0' formatNumberScale='0' startingAngle='45' enableRotation='1' caption='Value Of Compound Interest' xAxisName='' numberPrefix='$' bgColor='FFFFFF' showBorder='1' borderColor='FFFFFF' borderThickness='1' canvasBgColor='ffffff' showAlternateHGridColor='0' plotGradientColor='' numberSuffix='' thousandSeparator=',' decimalSeparator='.'><set value='24700.0' label='Beginning Balance' /><set value='483667.0' label='Annual Contributions' /><set value='580825.0' label='Compound Interest' /></chart>"); // --> </script> <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>$24,700</td><td>$18,000</td><td>$2,989</td><td>$45,689</td></tr><tr><td role="rowheader" scope="row">2</td><td>45,689</td><td>18,540</td><td>4,496</td><td>68,725</td></tr><tr><td role="rowheader" scope="row">3</td><td>68,725</td><td>19,096</td><td>6,147</td><td>93,969</td></tr><tr><td role="rowheader" scope="row">4</td><td>93,969</td><td>19,669</td><td>7,955</td><td>121,592</td></tr><tr><td role="rowheader" scope="row">5</td><td>121,592</td><td>20,259</td><td>9,930</td><td>151,781</td></tr><tr><td role="rowheader" scope="row">6</td><td>151,781</td><td>20,867</td><td>12,085</td><td>184,734</td></tr><tr><td role="rowheader" scope="row">7</td><td>184,734</td><td>21,493</td><td>14,436</td><td>220,662</td></tr><tr><td role="rowheader" scope="row">8</td><td>220,662</td><td>22,138</td><td>16,996</td><td>259,796</td></tr><tr><td role="rowheader" scope="row">9</td><td>259,796</td><td>22,802</td><td>19,782</td><td>302,380</td></tr><tr><td role="rowheader" scope="row">10</td><td>302,380</td><td>23,486</td><td>22,811</td><td>348,676</td></tr><tr><td role="rowheader" scope="row">11</td><td>348,676</td><td>24,190</td><td>26,101</td><td>398,967</td></tr><tr><td role="rowheader" scope="row">12</td><td>398,967</td><td>24,916</td><td>29,672</td><td>453,556</td></tr><tr><td role="rowheader" scope="row">13</td><td>453,556</td><td>25,664</td><td>33,545</td><td>512,765</td></tr><tr><td role="rowheader" scope="row">14</td><td>512,765</td><td>26,434</td><td>37,744</td><td>576,942</td></tr><tr><td role="rowheader" scope="row">15</td><td>576,942</td><td>27,227</td><td>42,292</td><td>646,460</td></tr><tr><td role="rowheader" scope="row">16</td><td>646,460</td><td>28,043</td><td>47,215</td><td>721,719</td></tr><tr><td role="rowheader" scope="row">17</td><td>721,719</td><td>28,885</td><td>52,542</td><td>803,146</td></tr><tr><td role="rowheader" scope="row">18</td><td>803,146</td><td>29,751</td><td>58,303</td><td>891,200</td></tr><tr><td role="rowheader" scope="row">19</td><td>891,200</td><td>30,644</td><td>64,529</td><td>986,373</td></tr><tr><td role="rowheader" scope="row">20</td><td>986,373</td><td>31,563</td><td>71,256</td><td>1,089,192</td></tr></table>