Albert Einstein called compound interest “the eighth wonder of the world.”

It is phenomenal to see the accelerating pace at which money is created – or paid, as the case may be – when it is left alone and allowed to compound.

This tool at the Securities and Exchange Commission website helps you see the effects of compounding: http://www.investor.gov/tools/calculators/compound-interest-calculator

To calculate the potential future value of an investment, don’t forget to adjust the annual interest rate downward for expenses as well as taxes, unless the account is in a tax-deferred vehicle such as a 401(k) (though remember it would be taxed upon withdrawal unless it is a Roth account).

Regardless  of whether an investment is in a taxable account or not, you may want to lower the interest rate for inflation in order to see what the investment would add up to in dollars with today’s purchasing power. For example, if you assumed the nominal return  is 8 percent and you assume inflation is 3 percent, then the real return, which you would enter in the calculator, is 5 percent.