Compound Compound interest
Money has babies, and the babies have babies. Early on you do the work; after the tipping point, the family does.
Compound interest means you earn returns on your returns, not just on what you put in. Each year's growth gets added to the pile, and next year the whole bigger pile grows.
The formula
For a single lump sum: FV = P × (1 + r)^n. For monthly saving it's the same idea repeated: every month the balance grows by r/12, then you add your deposit.
The worked example
€500 a month at 7% a year for 30 years: you put in €180,000 and end with about €610,000. Roughly €430,000 of that is growth you never deposited.
Why it matters for you
The two levers you control are how much you add and how long you leave it. Time is the stronger one, because the curve bends upward at the end. The rate matters too, which is why fees (lesson: TER and cost drag) quietly eat into it.
The janitor who left $8 million
Ronald Read pumped gas and fixed cars in Brattleboro, Vermont for about 25 years, then worked part-time as a janitor at J.C. Penney until 1997. He drove a used Toyota Yaris and held his jacket together with safety pins.
When he died in 2014 at 92, his town learned he was worth nearly $8 million. He'd bought dividend-paying blue-chip stocks in businesses he understood, reinvested every dividend, spread himself across 95+ companies, and simply never sold. He left $4.8 million to the local hospital and $1.2 million to the library.
Two levers: double the monthly amount, or double the years. Which grows the final number more?
Doubling the years. Doubling the amount doubles the result; doubling the time multiplies it by far more, because growth compounds on growth (at 7%, 15 → 30 years takes €500/month from about €158k to about €610k).