when you hit your 45 year savings mark and your twin would have saved for 15 years your twin will have less although they would have invested roughly twice your principal investment 
the same logic applies to opening an individual retirement account ira and taking advantage of an employer sponsored retirement account such as a 401 k or 403 b plan start early and be consistent with your payments to get the maximum power of compounding pros and cons compound interestcan help build wealth long term in savings and investmentsmitigates wealth erosion riskscompounding can work for you when making loan repaymentsworks against consumers making minimum payments on high interest loans or credit card debtsreturns are taxablechallenging to calculatecompound interest in investingan investor opting for a brokerage account s dividend reinvestment plan drip is essentially using the power of compounding in their investments assets that have dividends like dividend stocks or mutual funds offer a one way for investors to take advantage of compound interest reinvested dividends are used to purchase more shares of the asset then more interest can grow on a larger investment investors can also get compounding interest with the purchase of a zero coupon bond traditional bond issues provide investors with periodic interest payments based on the original terms of the bond issue because these payments are paid out in check form the interest does not compound zero coupon bonds do not send interest checks to investors instead this type of bond is purchased at a discount to its original value and grows over time zero coupon bond issuers use the power of compounding to increase the value of the bond so it reaches its full price at maturity 9tools for calculating compound interestyou can use several tools to help you calculate compound interest including microsoft excel which you can use in three different ways the first way to calculate compound interest is to multiply each year s new balance by the interest rate suppose you deposit 1 000 into a savings account with a 5 interest rate that compounds annually and you want to calculate the balance in five years the second way to calculate compound interest is to use a fixed formula the compound interest formula is p 1 i n p where p is the principal i is the annual interest rate and n is the number of periods a third way to calculate compound interest is to create a macro function online calculators for compound interestyou can also use several free compound interest calculators online 