Growth
Growth refers to an increase something
(e.g. money) over
time (e.g. one year). When you save money, growth is very important.
In the following four examples the money is saved for 47 years.
But how much the money grows per year differs.
Example 1 (2%)
You are 20 years old, and save $100. The money grows with 2 % / year.
When you are 21, your savings will be worth $100 * 1.02 = $102
When you are 22, your savings will be worth $100 * 1.02 * 1.02 = $104.04
When you are 23, your savings will be worth $100 * 1.02 * 1.02 * 1.02 = $106.12
When you are 24, your savings will be worth $100 * 1.02 * 1.02 * 1.02 * 1.02
= $108.24
…
When you are 67, your savings will be worth $100 * (1.02)47 = $253.63
Example 2 (5%)
You are 20 years old, and save $100. The money grows with 5 % / year.
When you are 21, your savings will be worth $100 * 1.05 = $105
When you are 22, your savings will be worth $100 * 1.05 * 1.05 = $110.25
When you are 23, your savings will be worth $100 * 1.05 * 1.05 * 1.05 = $115.76
When you are 24, your savings will be worth $100 * 1.05 * 1.05 * 1.05 * 1.05
= $121.55
…
When you are 67, your savings will be worth $100 * (1.05)47= $990.60
Example 3 (8%)
You are 20 years old, and save $100. The money grows with 8 % / year.
When you are 21, your savings will be worth $100 * 1.08 = $108
When you are 22, your savings will be worth $100 * 1.08 * 1.08 = $116.64
When you are 23, your savings will be worth $100 * 1.08 * 1.08 * 1.08 = $125.97
When you are 24, your savings will be worth $100 * 1.08 * 1.08 * 1.08 * 1.08
= $136.05
…
When you are 67, your savings will be worth $100 * (1.08)47 = $3723.20
Example 4 (11%)
You are 20 years old, and save $100. The money grows with 11 % / year.
When you are 21, your savings will be worth $100 * 1.11 = $111
When you are 22, your savings will be worth $100 * 1.11 * 1.11 = $123.21
When you are 23, your savings will be worth $100 * 1.11 * 1.11 * 1.11 = $136.76
When you are 24, your savings will be worth $100 * 1.11 * 1.11 * 1.11 * 1.11
= $151.81
…
When you are 67, your savings will be worth $100 * (1.11)47 = $13495.22
In the diagram below, you can see and compare how much $100 increase
in value over time at different growth levels.
