Compound Interest Explained: How $1,000 Becomes Millions

How can a small amount of money grow into millions? Interest earns interest. That's compound interest. In this Short: - Benjamin Franklin's 1790 gift: £1,000 each to Boston and Philadelphia, to be lent out at 5% for 200 years. Two centuries later each fund had grown to millions of dollars (sources differ on the exact figures) - His own math: £1,000 at 5% for 100 years is about £131,000 - Why growth starts slow and then gets steep - The Rule of 72: divide 72 by the yearly rate to estimate how many years it takes to double (most accurate at roughly 3-13%) - An example (assumed 7% a year, not a prediction): $100 a month for 30 years is $36,000 in and about $122,000 out; for 40 years, $48,000 in and about $262,000 out - The same snowball works against you with debt Sources: - What "Miracle of Compound Interest"? (Philanthropy Roundtable): https://www.philanthropyroundtable.org/magazine/what-miracle-of-compound-interest/ - Rule of 72: https://en.wikipedia.org/wiki/Rule_of_72 I did not read the original documents; the Franklin figures come from secondary sources and the example numbers are my own arithmetic. This is general information, not personal or investment advice. The Plain Brain explains big ideas in finance, psychology, and sociology in plain words. A new Short every day. #Shorts #CompoundInterest #PersonalFinance #Investing #Money

Added 20 Oct 2026