How to Build $1M

How to build $1 million

Visualizing the time it takes for you to become a millionaire

What is compound interest?

For savers, compound interest is like a gift. It's the gift that keeps giving. Once you start saving, the magic of compound interest will cause your money to grow at a faster and faster pace as the years pass.

Compound interest is when your interest is paid on the initial sum, plus accumulated interest. This is in contrast to simple interest where the interest is only on the initial sum. It is like what Benjamin Franklin once wrote, "Money makes money, and the money that makes money makes more money"

Standard Savings Account

For standard savings account, the interest you earn is usually stated as an annual rate. That means that for each year you have your money in the account, you earn the stated interest rate. For example, if your bank offers you a 3% annual interest rate, that means that for each year you have your money in the account, you earn 3% of your total balance.

Certificate of Deposit(CD)

For certificate of deposit, the interest you earn is usually calculated on a daily basis. That means that for each day you have your money in the account, you earn interest on your balance.

Certificates of deposit are a form of time deposit, a deposit account that locks in the amount of money you deposit for a specific period of time. The bank pays you interest on the amount you deposit. You can earn a higher interest rate on a CD than you can on a savings account.

For certificate of deposit, the interest you earn is usually calculated on a daily basis. That means that for each day you have your money in the account, you earn interest on your balance.

Compounding investment returns.

Compound interest is a powerful force. If you invest $10,000 and earn 10% per year, your investment will be worth $11,000 after 1 year, $12,100 after 2 years, $13,310 after 3 years, $14,641 after 4 years, and so on.

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