The power of compounding
Compound interest means you earn returns on your past returns, not just your contributions. The longer the time horizon, the more the growth curve bends upward โ which is why starting early beats contributing more later.
A realistic return assumption
Historically the S&P 500 has averaged roughly 7% after inflation over the long run, but returns are volatile year to year. Use a conservative rate for planning and treat the result as a range, not a promise.
The Rule of 72 โ and the drag of fees
A quick mental shortcut: divide 72 by your return to estimate the years it takes money to double. At 7%, thatโs about 10 years; at 4%, about 18. The flip side is that fees compound against you the same way โ a fund charging a 1% expense ratio quietly shaves 1% off your return every year, which over decades can cost a noticeable slice of the final balance. Favoring low-cost index funds is one of the simplest ways to keep more of the compounding for yourself.