Saving & investing
Compound interest: how to grow your savings
Compound interest is, in the phrase often attributed to Einstein, the eighth wonder of the world. Here is why, and how to use it for your savings.
Simple vs. compound interest
With simple interest, you earn interest only on the initial capital. With compound interest, the interest is reinvested and earns further interest: your money grows exponentially.
Ana vs. Borja
Ana invests €200/month from age 25; Borja does the same but from 35. At 6 % a year, by 65 Ana would have about €400,000 and Borja about €200,000. The difference is not double the contributions — it is 10 extra years of compounding.
The rule of 72
To estimate how many years your money takes to double, divide 72 by the annual rate. At 6 %, your capital doubles every 12 years (72 ÷ 6).
How to make the most of it
- Start early: time is the most powerful factor.
- Be consistent: regular contributions, even small ones.
- Reinvest the interest instead of withdrawing it.
Project your savings growth with regular contributions.
Compound interest calculator →