What compounding is
When your investment earns a return and you keep that return invested, next year you earn on a bigger amount. Over time the growth curves upward instead of moving in a straight line.
A simple example
Invest $10,000 at a hypothetical 7% a year. After 10 years it is about $19,700. After 20 years about $38,700. After 30 years about $76,100. The last ten years add far more than the first ten. This example is only an illustration of the maths, not a prediction or promise of returns.
Three levers you control
- Time. Start early. Every extra year counts.
- Contributions. Adding regularly speeds things up.
- Costs. Lower fees leave more to compound.
Try it yourself
Use the projection tool on the Invest page to test different amounts and time horizons with your own assumptions.
Key takeaways
- Reinvested gains earn their own gains.
- Time is the most powerful input.
- Small regular additions make a big difference.
This lesson is general education and not personal financial, tax or legal advice. Investing involves risk, including loss of principal.