"I don't get haircuts—it costs thousands of dollars! - Warren Buffett" — Warren Buffett
Price, frequency, and your age reveal its true cost at 65.
Frequently Asked Questions
What is this tool and how do I use it?
Enter the cost of something you're thinking of buying, choose how often you spend that amount, and input your age. The calculator shows what that money could grow into if you invested it until retirement—helping you judge a purchase's real cost.
How does compound interest actually work?
Compound interest is "interest on interest." Each year your investment earns returns, and those returns themselves begin earning returns. Over decades, this snowball effect accelerates growth dramatically.
Where does the 7 % return assumption come from?
7 % reflects the long‑term average annual total return of diversified stock‑market index funds after inflation. While yearly returns swing, history shows that broad, low‑cost investing has delivered about this level over many decades.
How do recurring expenses get compounded?
For daily, monthly, or yearly spends we apply the future‑value‑of‑annuity formula, adding each contribution and letting every dollar compound until retirement.
Why is starting early more important than investing big later?
Time in the market beats timing the market. Dollars invested earlier enjoy more compounding cycles, so even small early contributions can outgrow larger later ones.
How do I start investing if I've never done it before?
A simple way is to open a low‑cost brokerage account and purchase a broad market index fund (e.g., ETFs tracking the S&P 500 or global indices). Automate contributions, stay diversified, and avoid high fees.