Compound Wizard
Just enter your principal, target return, and time period, and the Compound Wizard calculates how your money grows over time. Compare against bank deposits, the S&P 500, Nasdaq 100, Warren Buffett, and Peter Lynch — all at a glance as a growing graph. See the 'magic of compounding' that time creates with your own eyes.
What is compound interest?
Compound interest means the interest you earn is added back to your principal, so from then on you earn interest on 'principal + interest' together. Interest earning more interest is what makes it snowball as time passes.
For example, 1,000,000 won at 10% compound interest becomes 1,100,000 won after one year and 1,210,000 won after two. Of the 110,000 won added in year two, 10,000 won is 'interest on last year's interest.' Over 10 or 20 years, that small difference grows into a gap simple interest can never match.
How is simple interest different?
Simple interest is always calculated only on your original principal. 1,000,000 won at 10% simple interest for 20 years earns twice the principal in interest (2,000,000 won), reaching 3,000,000 won. The same amount at compound interest becomes about 6,730,000 won. The longer the period, the wider the gap.
That's why compound interest is often called 'the magic of time.' As much as the rate, how long and how steadily you keep it invested tends to decide the outcome.
The Rule of 72
The time it takes for your principal to double can be roughly estimated as '72 ÷ rate(%).' At 6% it's about 12 years, at 8% about 9 years, and at 12% about 6 years to double.
Try different rates in the Compound Wizard and you'll see this rule play out right on the graph.
How to use the Compound Wizard
Enter your principal, expected rate, and period, and it shows the result as a growing graph. You can also compare against reference rates like bank deposits, the S&P 500 or Nasdaq 100, and legendary investors such as Warren Buffett and Peter Lynch.
Note that the rates here are past averages or assumptions. Past performance doesn't guarantee future returns, and real investing carries the risk of loss, so treat the results as a way to build a feel for compounding. The Compound Wizard isn't a tool for recommending any product.
Frequently Asked Questions
What's the biggest difference between simple and compound interest?
Simple interest applies only to the original principal, while compound interest also earns interest on the interest already added. The longer the period, the faster compound interest grows.
What rate should I enter?
There's no single right answer. Try safe values like bank deposit rates (2–4%) up to more volatile ones like the S&P 500's long-term average (roughly 7–10%), and compare. Higher returns come with higher risk.
Is it guaranteed my money will grow as calculated?
No. The Compound Wizard only calculates based on the assumptions you enter. Real returns vary year to year and can turn negative, so treat the results as a reference only.
Is the Rule of 72 accurate?
It's a rough estimate, not an exact formula. But in the 6–10% range it matches reality fairly well, so it's handy for quickly gauging how long it takes to double your money.