FinanceBeginner10 min read • October 4, 2025
Compound Interest: The Mathematics of Wealth Building
Small, consistent growth over time beats almost everything.
The Formula
A = P(1 + r/n)^(nt)
A: final amount • P: principal • r: annual rate • n: compounds per year • t: years
Example: Monthly Investing
Invest $200 per month at 7% annually, compounded monthly, for 10 years. How much will you have?
- P = 200/month (use series formula)
- r = 0.07 • n = 12 • t = 10
Result: about $34,000—with roughly $10,000 from growth alone.
What Changes the Outcome Most?
- Starting earlier (time matters most)
- Consistent contributions
- Lower fees