Tools / Save & grow / Chapter 3 · The Price of Time
Compounding & time
Time does most of the work in saving, and most of the damage in borrowing. Enter a starting sum, a monthly amount, a return and a horizon.
1 · The idea
Future value
A lump sum grows by (1 + r) each year. Monthly contributions each grow for the time they remain invested; the second term adds them up. To see buying power, divide by (1 + inflation)^t.
The formula
FV = P × (1 + r)^t + C × ((1 + i)^(12t) − 1) ÷ i
- P
- starting amount
- C
- amount added each month
- r
- yearly return
- i
- equivalent monthly return
- t
- years
2 · A worked example
$5,000 plus $300.00 a month for 25 years at 6% becomes $224,346. You paid in $95,000; growth supplied $129,346. After 2.5% inflation the buying power is $121,010.
3 · Now use your own numbers
Change anything. The result updates instantly.
Illustrative, not personal advice. Inspired by Chapter 3 · The Price of Time of Money, Explained From the Inside. Your figures stay in this browser. Real products add terms, taxes and conditions that this simple model leaves out.
4 · Take care
What this tool can’t see
- A return is an assumption, not a promise. Real returns arrive unevenly; see “Losses and recovery”.
- Fees reduce the return you keep: see “The cost of investing”.
5 · Go further
Where this fits
See it in a life:
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Keep the thinking going. Checklists, questions and worksheets inspired by the book, for the next time money is on the table. Part of the Reader’s Letter: a few times a year, never more.
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