Growth
The Power of Compounding
Returns on returns. Frequency, contributions, and time turn a linear path into a curve.
Compounding is returns generating their own returns. Linear saving becomes a curve once time, rate and frequency have enough runway.
A = P × (1 + r/n)^(n × t)
P — Principal
The starting stake. Size matters, but time usually matters more.
r — Annual rate
Nominal return as a decimal. 8% is 0.08. Fees and tax sit inside this number in the real world.
n — Frequency
How often interest is credited. Monthly versus annual is a small edge that stacks over decades.
t — Time
The only input you cannot buy back. Contributions that step up with income accelerate the curve.
Takeaway
Open the Compound Engine. Hold rate and principal still, then extend the horizon. The last decade does more work than the first.
Run the numbers