The Curve That Bends Upward
Simple interest pays on principal only; compound interest pays on principal plus all previously earned interest. The growth rate then applies to an ever-larger base, which is why the curve accelerates instead of staying linear.
A $10,000 deposit at 7% becomes about $20,000 in 10 years, $40,000 in 20, and $76,000 in 30, the last decade alone adds more than the first two combined.
The Cost of Waiting
To reach $1 million by 65 at 7%, a 25-year-old needs about $380 per month. A 35-year-old needs $815. A 45-year-old: $1,900. A 55-year-old: $5,400. Delay doesn't just move the goalposts, it multiplies the required contribution.
This is why retirement calculators hammer the same message: the most powerful asset is the decade you're currently in.
Rules for the Real World
Model with honest numbers: 5–7% nominal returns, fees under 0.5%, and inflation subtracted for real-terms planning. The Rule of 72 works both ways, at 3% inflation, prices double every 24 years.
Automate contributions on payday. The best compounding strategy ever tested is simply never interrupting the compounding.
Sources
FAQ
What is the Rule of 72?
Divide 72 by the annual return to estimate doubling time: at 6%, money doubles in ~12 years.
How much do I need to retire?
A common target is 25× annual spending, the inverse of the 4% withdrawal rule.
Is it too late to start at 45?
No, but the required monthly contribution is roughly 2–5× higher than a 25-year-old's for the same goal. The second-best time to start is today.
Please read this first: these results are educational estimates. For real decisions, talk to a qualified professional.