Compound interest and the time value of money

Why starting early beats starting bigger

Compound interest is when your money earns money, then that money earns money, then that. The Rule of 72 stacked over years.

Most people underestimate it because the early years look boring. The first decade is almost linear. Around year 15 the curve bends. By year 30 it looks like magic.

People who start early win. Not because they're smarter. They gave their money more time to work.

Around year 15 the curve bends. By year 30 it looks like magic.

Key points

• Early dollars count the most. A dollar invested at 25 has 40 years to compound. At 45, 20 years. Same dollar, wildly different future.
• Consistency beats amount. $500/month for 45 years at 9% grows to nearly $4 million. Most of that is interest, not your contributions. Showing up is the whole job.
• Small head starts create big gaps. Start at 25 with $500/month and end up with more than someone who starts at 35 with double. Ten years of compounding is worth that much.
• Time is the one ingredient you can't buy back. Increase income, cut expenses, optimize rate. You can't get back years you skipped.

Time is the one ingredient you can't buy back.

If you feel late, start anyway

Best time to plant a tree was 20 years ago. Second best is today. Compounding still works at 35, 45, 55. Start now.