Visualise the power of compound interest on Australian savings accounts, term deposits, super, or any investment over time.
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| Year | Opening Balance | Deposits | Interest Earned | Closing Balance |
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Albert Einstein reportedly called compound interest the "eighth wonder of the world." The key insight is that you earn interest not just on your principal, but on all previously accumulated interest.
Simple interest: I = P × r × t. Compound interest: A = P × (1 + r/n)^(n×t). The difference grows dramatically over time — $10,000 at 6% for 30 years gives $18,000 simple interest vs $60,226 compound (monthly).
High-interest savings accounts and term deposits in Australia compound interest monthly or quarterly. Superannuation compounds tax-effectively inside the fund at a concessional 15% tax rate during accumulation.
Divide 72 by the interest rate to estimate how many years it takes to double your money. At 6% p.a., your money doubles in approximately 12 years (72 ÷ 6 = 12). At 9%, about 8 years.
In Australia, interest earned in savings accounts and term deposits is taxable at your marginal rate. Consider tax-effective structures like superannuation for long-term compound growth.