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 $5,232 per year with the annual contribution being increased by 1% per year (cumulative contributions of $217,967) you are able to accumulate $1,079,155 over 35 years. Compound interest makes up $861,189 of your future balance. <div id="chart1Container">Chart will load here</div> <script type="text/javascript"> <!-- var myChart1 = new FusionCharts( "Pie2D", "myChart1Id", "100%", "100%", "0", "1" ); myChart1.setXMLData("<chart showValues='1' showFCMenuItem='0' decimals='0' formatNumberScale='0' startingAngle='45' enableRotation='1' caption='Value Of Compound Interest' xAxisName='' numberPrefix='$' bgColor='FFFFFF' showBorder='0' canvasBgColor='ffffff' showAlternateHGridColor='0' plotGradientColor='' numberSuffix='' thousandSeparator=',' decimalSeparator='.'><set value='0.0' label='Beginning Balance' color='0B9191' /><set value='217967.0' label='Annual Contributions' color='F58127' /><set value='861189.0' label='Compound Interest' color='d8d8d8' /></chart>"); // --> </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 @ 1.00%</th><th scope="col">Interest @ 8.00%</th><th scope="col">Ending Balance</th></tr><tr><td role="rowheader" scope="row">1</td><td>$0</td><td>$5,232</td><td>$419</td><td>$5,651</td></tr><tr><td role="rowheader" scope="row">2</td><td>5,651</td><td>5,284</td><td>875</td><td>11,810</td></tr><tr><td role="rowheader" scope="row">3</td><td>11,810</td><td>5,337</td><td>1,372</td><td>18,519</td></tr><tr><td role="rowheader" scope="row">4</td><td>18,519</td><td>5,391</td><td>1,913</td><td>25,822</td></tr><tr><td role="rowheader" scope="row">5</td><td>25,822</td><td>5,444</td><td>2,501</td><td>33,768</td></tr><tr><td role="rowheader" scope="row">6</td><td>33,768</td><td>5,499</td><td>3,141</td><td>42,408</td></tr><tr><td role="rowheader" scope="row">7</td><td>42,408</td><td>5,554</td><td>3,837</td><td>51,799</td></tr><tr><td role="rowheader" scope="row">8</td><td>51,799</td><td>5,609</td><td>4,593</td><td>62,001</td></tr><tr><td role="rowheader" scope="row">9</td><td>62,001</td><td>5,666</td><td>5,413</td><td>73,079</td></tr><tr><td role="rowheader" scope="row">10</td><td>73,079</td><td>5,722</td><td>6,304</td><td>85,106</td></tr><tr><td role="rowheader" scope="row">11</td><td>85,106</td><td>5,779</td><td>7,271</td><td>98,156</td></tr><tr><td role="rowheader" scope="row">12</td><td>98,156</td><td>5,837</td><td>8,319</td><td>112,313</td></tr><tr><td role="rowheader" scope="row">13</td><td>112,313</td><td>5,896</td><td>9,457</td><td>127,665</td></tr><tr><td role="rowheader" scope="row">14</td><td>127,665</td><td>5,955</td><td>10,690</td><td>144,309</td></tr><tr><td role="rowheader" scope="row">15</td><td>144,309</td><td>6,014</td><td>12,026</td><td>162,349</td></tr><tr><td role="rowheader" scope="row">16</td><td>162,349</td><td>6,074</td><td>13,474</td><td>181,897</td></tr><tr><td role="rowheader" scope="row">17</td><td>181,897</td><td>6,135</td><td>15,043</td><td>203,074</td></tr><tr><td role="rowheader" scope="row">18</td><td>203,074</td><td>6,196</td><td>16,742</td><td>226,012</td></tr><tr><td role="rowheader" scope="row">19</td><td>226,012</td><td>6,258</td><td>18,582</td><td>250,852</td></tr><tr><td role="rowheader" scope="row">20</td><td>250,852</td><td>6,321</td><td>20,574</td><td>277,747</td></tr><tr><td role="rowheader" scope="row">21</td><td>277,747</td><td>6,384</td><td>22,730</td><td>306,861</td></tr><tr><td role="rowheader" scope="row">22</td><td>306,861</td><td>6,448</td><td>25,065</td><td>338,374</td></tr><tr><td role="rowheader" scope="row">23</td><td>338,374</td><td>6,512</td><td>27,591</td><td>372,477</td></tr><tr><td role="rowheader" scope="row">24</td><td>372,477</td><td>6,577</td><td>30,324</td><td>409,379</td></tr><tr><td role="rowheader" scope="row">25</td><td>409,379</td><td>6,643</td><td>33,282</td><td>449,304</td></tr><tr><td role="rowheader" scope="row">26</td><td>449,304</td><td>6,710</td><td>36,481</td><td>492,494</td></tr><tr><td role="rowheader" scope="row">27</td><td>492,494</td><td>6,777</td><td>39,942</td><td>539,213</td></tr><tr><td role="rowheader" scope="row">28</td><td>539,213</td><td>6,845</td><td>43,685</td><td>589,742</td></tr><tr><td role="rowheader" scope="row">29</td><td>589,742</td><td>6,913</td><td>47,732</td><td>644,388</td></tr><tr><td role="rowheader" scope="row">30</td><td>644,388</td><td>6,982</td><td>52,110</td><td>703,479</td></tr><tr><td role="rowheader" scope="row">31</td><td>703,479</td><td>7,052</td><td>56,842</td><td>767,374</td></tr><tr><td role="rowheader" scope="row">32</td><td>767,374</td><td>7,122</td><td>61,960</td><td>836,456</td></tr><tr><td role="rowheader" scope="row">33</td><td>836,456</td><td>7,194</td><td>67,492</td><td>911,141</td></tr><tr><td role="rowheader" scope="row">34</td><td>911,141</td><td>7,266</td><td>73,473</td><td>991,880</td></tr><tr><td role="rowheader" scope="row">35</td><td>991,880</td><td>7,338</td><td>79,937</td><td>1,079,155</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;">&nbsp;FINANCIAL PLANNERS</span> <span style="color:#000;font-size:100%;font-weight:normal;">&ndash; <a href="http://www.plannerportal.com" target="_PP_WINDOW">Affordable Financial Planning Software</a> &ndash; <a href="http://www.plannerportal.com" target="_PP_WINDOW">www.PlannerPortal.com</a></span>&nbsp;&nbsp;</span>