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Earning money on your earnings. Your gains make more gains over time.
Why It Matters
Einstein allegedly called compound interest the eighth wonder of the world. Here's why: $10,000 invested at 10% becomes $67,000 in 20 years - but $174,000 in 30 years. That extra decade doesn't add $67,000; it adds $107,000. Time is your superpower. Starting at 25 instead of 35 can mean retiring with twice as much money.
Key Points
- The Rule of 72: divide 72 by your return rate to estimate how long it takes to double (7% return = ~10 years to double)
- Reinvesting dividends turbocharges compounding - $10,000 in the S&P 500 in 1980 would be $1.1M today with dividends reinvested
- Starting early matters more than investing more money later - time beats timing
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Common Questions
Earning money on your earnings. Your gains make more gains over time. Einstein allegedly called compound interest the eighth wonder of the world. Here's why: $10,000 invested at 10% becomes $67,000 in 20 years - but $174,000 in 30 years.
Einstein allegedly called compound interest the eighth wonder of the world. Here's why: $10,000 invested at 10% becomes $67,000 in 20 years - but $174,000 in 30 years. That extra decade doesn't add $67,000; it adds $107,000. Time is your superpower. Starting at 25 instead of 35 can mean retiring with twice as much money.
The Rule of 72: divide 72 by your return rate to estimate how long it takes to double (7% return = ~10 years to double)
Reinvesting dividends turbocharges compounding - $10,000 in the S&P 500 in 1980 would be $1.1M today with dividends reinvested
Starting early matters more than investing more money later - time beats timing