What compound interest actually does
Compound interest pays returns on returns. Each month your balance earns a return; that return is added to the balance, and next month the larger balance earns the next return. Over 20–30 years this is the single most powerful force in personal finance.
The catch: real markets are noisy. A "7% annual return" actually comes from a wide distribution of monthly outcomes — some months up 15%, some months down 10%. Calculators that hide that noise make compounding look smoother than it is.
How AskIUL's calculator is different
- Pulls recent S&P 500 monthly returns instead of guessing a flat rate.
- Returns three scenarios — conservative, base, and aggressive — so you see a range, not a single number.
- Models monthly contributions over your chosen horizon, including early-year smoothing.
- Shows annualized return implied by the base scenario so you can sanity-check it against advice you've heard elsewhere.
From compound interest to IUL
Once you understand the compounding range, the next question is how to capture it. Most savers should start with a 401(k) match and a Roth IRA. After that, some people add an Indexed Universal Life (IUL) policy because it caps the upside in exchange for a 0% floor and tax-free access. Run the IUL calculator next to see whether that trade-off is interesting for your situation.