Year 1: $1,000 * 1.05 = $1,050

Wed, 29 Apr 2026 15:27:59 +0000

Understanding the Simple Power of Compound Growth: Year 1’s $1,000 Accelerates to $1,050 When learning about personal finance, investing, or long-term savings, one of the most compelling concepts is how even small amounts of money can grow significantly over time—especially through compound interest. The example $1,000 growing by 5% in one year to $1,050 illustrates this principle beautifully. ### What Does $1,000 * 1.05 = $1,050 Mean? At first glance, multiplying $1,000 by 1.05 may seem straightforward, but it reveals the magic of compound interest in action. Here’s a breakdown: