Stock AnalizWhat is compound interest and why does it matter so much?
Updated November 15, 2026 · examples use today’s data
Compound interest means earning returns on your past returns, not just on the money you put in. In the early years it looks slow; after a decade or two it does most of the work.
The numbers
Invest $200 a month for 30 years and you put in $72,000. At a 7% average yearly return you end up with about $234,000; at 10% with about $413,000. The extra three percentage points nearly double the result, and most of the money comes in the last ten years.
Time beats timing
Starting ten years earlier matters more than picking the perfect month to buy. Missing a few of the market's best days, which usually come right after the worst ones, does far more damage than buying at a bad moment.
What works against you
Fees, taxes and inflation compound too. A 1% annual fee looks small but takes a large bite out of a 30-year result.
Frequently asked questions
What is the rule of 72?
Divide 72 by the yearly return to get the years it takes to double your money: at 8%, about nine years.
What return should I assume?
The US stock market has returned roughly 10% a year over the very long run before inflation, about 7% after. Individual decades vary a lot.
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Educational content, not investment advice. Figures in the examples come from company filings and market prices and update automatically.