Compound interest earns interest on both your principal and accumulated interest. The more frequently it compounds (daily vs. monthly vs. annually), the faster your savings grow.
The Rule of 72 estimates how long it takes money to double: divide 72 by the annual interest rate. At 6% return, money doubles in approximately 12 years.
Financial experts recommend saving 15-20% of gross income. Start with what you can afford and increase gradually. Automate transfers to make saving effortless.
APY (Annual Percentage Yield) includes compound interest and shows what you earn. APR (Annual Percentage Rate) shows simple interest. For savings, always compare APYs.
Yes. High-yield savings accounts (4-5% APY) earn significantly more than traditional accounts (0.01-0.5% APY). They're FDIC-insured and ideal for emergency funds and short-term goals.
Inflation erodes purchasing power. If inflation is 3% and your savings earn 2%, you're losing 1% in real value. Ensure your savings rate exceeds inflation to grow wealth.
If you're saving toward something specific โ a house, a car, an emergency fund โ my savings goal calculator works backward from your target date to tell you the monthly number.