Quick answer: investment growth compounds — your returns earn their own returns over time. Use our free Investment Calculator to project your future value from an initial investment, monthly contributions, and expected return rate.
Why Compounding Is Powerful
Each year's gains get added to your balance, so next year's growth applies to a larger amount. Over decades, this compounding effect means your later years of growth can dwarf your original contributions.
Why Starting Early Matters So Much
Someone investing $200/month starting at age 25 can end up with substantially more at retirement than someone investing the same amount starting at 35, purely due to the extra decade of compounding — even though the later starter contributes similarly over their shorter timeframe.
Frequently Asked Questions
What return rate should I use to estimate?
Historical long-term stock market averages are often cited around 7-10% annually before inflation, but actual returns vary and aren't guaranteed.
Does this account for inflation?
No, this shows nominal future value; real purchasing power will be somewhat lower after inflation.
How much difference do monthly contributions make?
Significant — consistent contributions combined with compounding often matter more than the initial lump sum for long-term growth.
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