Here are a few charts that showcase how many years it takes to reach each $1 million threshold given that you regularly invest and earn a decent rate of return.

To go from $0 to $1 million:

Monthly Contribution	8% Return	9% Return	10% Return	11% Return
$100	52.9 years	48.3 years	44.5 years	41.4 years
$250	41.6	38.3	35.5	33.1
$500	33.4	30.9	28.8	27.0
$1,000	25.5	23.9	22.4	21.2
$1,291.66	22.8	21.4	20.2	19

To go from $1 million to $2 million:

Monthly Contribution	8% Return	9% Return	10% Return	11% Return
$100	8.6 years	7.7 years	6.9 years	6.3 years
$250	8.5	7.5	6.8	6.2
$500	8.2	7.4	6.7	6.1
$1,000	7.8	7.1	6.4	5.9
$1,291.66	7.6	6.9	6.3	5.7

To go from $2 million to $3 million:

Monthly Contribution	8% Return	9% Return	10% Return	11% Return
$100	5.1 years	4.5 years	4.1 years	3.7 years
$250	5.0	4.5	4.0	3.7
$500	4.9	4.4	4.0	3.6
$1,000	4.8	4.3	3.9	3.5
$1,291.66	4.7	4.2	3.8	3.5

That $1,291.66 number didn’t come out of thin air — it represents the current maximum monthly contributions available in a 401(k) or 403(b) account for most people. What these charts mean is that you can go from $0 to $3 million in somewhere between 28 and 35 years with a bit of determination to take advantage of the opportunities you have available. Most of that time is spent getting to that first million. Once you hit that milestone, compounding really takes over to help you reach your ultimate goal.

Source: Fool.com

So, I’ve decided to give them a proper answer: How much interest do you earn on a million dollars? The answer is, of course, it depends.

It depends on several factors including: What is the interest rate? Over what period of time? How often is the interest calculated and paid during the period?

What is the interest rate?
Obviously the higher the interest rate, the better. Even small differences result in large amounts of money over long periods of time. As a practical example, we’ll use a 4% interest rate which is easily available with an Emigrant Direct Savings account.

Over what period of time?
The longer the better. Compound interest works it’s magic best over long periods of time. I’ll give a couple of examples using different periods of time.

How often is the interest calculated and paid?
The more often, the better. Is the money compounded yearly, quarterly, monthly, or daily? For our example we’ll assume the money is compounded monthly.

So, to answer the question, how much interest do you earn on One Million Dollars (assuming a 4% interest rate, compounded monthly)?

One Day – $109.59

One Month – $3,333.33

One Year – $40,741.54

Five Years – $220,996.59

Ten Years – $490,832.68

Twenty Years – $1,222,582.09

So, it doesn’t take long for the money to really add up. And there are a lot of ways to get a higher interest rate than 4%. Use a compound interest calculator to experiment with different interest rates, periods of time, and compounding periods.

Compound Interest has also been called the eighth wonder of the world and the greatest mathematical discovery of all time.

Fortunately for the rest of us, you don’t have to be a genius to understand compound interest. In fact, it’s pretty simple.

The concept is this: When you invest money you earn interest on your capital. The next month, you earn interest on both your original capital and the new interest. The third month you earn interest on your capital and the first two month’s interest. You get the picture. The concept of earning interest on your interest is the miracle of compounding.

It’s very much like a snowball effect. As your capital rolls down the hill it becomes bigger and bigger. Even if you start with a small snowball, given enough time, you can end up with an extremely large snowball. Over the period of many years, the returns you get from compounding will eventually outpace your initial contributions.

As an example, if you invest $2,000 a year at the age of 14, at a 10 percent annual rate of return, and you set aside the same amount at the same return for the next four years. In other words, you put aside a total of $10,000 over five years, beginning when you’re 14 and stopping when you’re 18. If you don’t invest another penny and your money keeps growing at the same rate of interest, you’ll have almost $1.2 million by the time you’re 65.

Most of us aren’t 14 anymore, but the point is, with compound interest, the sooner you start, the better.

Compound Interest can be a fantastic thing when you’re saving or investing money. Unfortunately, it works in reverse when you’re borrowing money and it explains why debts often spiral out of control.

If your credit card has a high interest rate and you can’t afford to pay off much each month, then it’s the credit card company that is getting the benefit of compound returns.

Understanding the power of compound interest can be a huge motivator in helping you get out of debt and start building wealth.

There are dozens of compound interest calculators, including this one, available on the internet. Try one out, see what compound interest can do for you, and start saving today.

“Those who understand compound interest are destined to collect it. Those who don’t are doomed to pay it.”