Compound interest

Compound interest means your money earns money, and then that money earns money too. The effect is small at first and becomes dramatic over time.

Three inputs control the shape: the starting amount, the rate of return, and time. A higher rate helps, but time is usually the strongest lever. Starting ten years earlier can matter more than finding a slightly better fund.

Contributions also compound. Regular monthly deposits add a second layer of growth on top of the first.