How compound interest works
Compound interest means you earn returns on your returns. Each month, your balance grows by the monthly rate and your new contribution is added. Over long periods the growth curve bends upward, which is why starting early matters more than starting big.
What is a FIRE number?
FIRE stands for Financial Independence, Retire Early. A common rule of thumb is that you need about 25 times your yearly spending invested, based on the "4% rule": withdrawing about 4% per year has historically lasted around 30 years in many US market scenarios. It is a planning shortcut, not a guarantee.
This calculator is for education only and is not financial advice. Real returns vary and can be negative.
FAQ
What return rate should I use?
Many people test a few scenarios, for example 4%, 6% and 8% per year. Lower numbers are more conservative. Inflation reduces what future money can buy.
Is the FIRE number accurate?
It is a rule of thumb (25× yearly spending). Taxes, fees, inflation and market timing all change the real number.