// accounting › Wealth Management
Future wealth from a starting principal plus regular yearly contributions, compounded.
A = P(1+r)^t + PMT·[((1+r)^t − 1)/r]
How a lump sum plus regular yearly top-ups grows when returns compound. It separates the money you put in from the growth that money then generates, so you can see how much of your final wealth is your own cash versus earnings.
P is your starting principal and grows on its own. PMT is each year's contribution, and the bracketed term grows that whole stream of contributions. r is the annual return as a decimal and t is the number of years. Adding the two parts gives the total future value.
Each contribution doesn't just sit there — it earns returns for every year that follows, and those returns earn returns of their own. Over a long horizon the compounded earnings can dwarf the cash you actually paid in.
The chart stacks three layers over time: your original principal at the base, the contributions you have added on top of that, and the compounded earnings on top again. The widening earnings band shows compounding accelerating in the later years.
Superannuation and retirement saving — $10,000 plus $6,000 a year at 7% for 30 years grows to well over $600,000, most of it earnings. Education funds — saving steadily for a child's university costs. Long-term share investing — seeing why starting early beats contributing more later.