Compound Growth Calculator
Understanding how annual growth rates compound over time is crucial for investment planning. See how different growth rates translate to real returns over 5 years.
5-YEAR COMPOUND GROWTH RATES
| Annual Growth Rate | 5-Year Multiplier | Total Increase |
|---|---|---|
| 7% | 1.40× | +40.3% |
| 10% | 1.61× | +61.1% |
| 12% | 1.76× | +76.2% |
| 15% | 2.01× | +101.1% |
| 20% | 2.49× | +148.8% |
| 25% | 3.05× | +205.2% |
| 30% | 3.71× | +271.3% |
Example: $10,000 Investment
With a 15% annual growth rate, your $10,000 investment would grow to $20,114 after 5 years - more than doubling your money!
UNDERSTANDING COMPOUND GROWTH
What is Compound Growth?
Compound growth occurs when your investment returns generate their own returns over time. Unlike simple interest, compound growth means you earn returns on your initial investment plus all the returns from previous periods.
The Power of Time
The table above shows 5-year returns, but compound growth becomes even more powerful over longer periods. A 15% annual return that doubles your money in 5 years would grow to over 4× your original investment in 10 years, and more than 16× in 20 years.
Real-World Context
Historical stock market returns average around 10% annually over long periods. High-growth stocks and sectors have achieved 20-30% annual returns during bull markets, while traditional bonds and savings accounts typically yield 2-7% annually.
Investment Strategy Implications
Understanding compound growth helps inform investment strategy. The difference between 10% and 20% annual returns is dramatic over time - it's not just twice as good, but results in 149% total returns versus 61% over 5 years.
INTERACTIVE CALCULATOR
After 5 Years
$20,114
Total Growth
+$10,114
Growth Multiple
2.01×
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