Compounding Revealed

The real power is seeing what compound growth implies over time. At 7% annual return, $10,000 doubles to $20,000 in about 10 years, then to $40,000 in 20, $80,000 in 30, and $160,000 in 40. Time is the multiplier — starting 10 years earlier buys one extra doubling, which means twice as much money.

This is why advisors stress starting early over starting big. Investing $5,000 at age 25 at 7% matches investing $10,000 at age 35 at the same rate — the early money earns one extra decade of doubling, so half the amount catches all the way up. The Rule of 72 makes that case viscerally clear.