Last checked: 27 September 2026
What compounding means
Compounding happens when returns are added to a balance and future returns are then calculated on the larger amount. With investments, returns are not fixed and losses can compound too.
Time can matter more than dramatic contributions
Starting earlier gives each contribution more potential periods to compound. Increasing contributions later can still make a major difference, so starting late does not make saving pointless.
Illustrations are not forecasts
A calculator using a constant annual percentage creates a smooth projection. Real savings rates can change, while investment returns fluctuate and fees reduce returns. Use projections to understand scenarios, not to promise an outcome.
Regular contributions change the picture
Adding money each month means growth comes from both contributions and returns. Test different monthly amounts and time periods rather than focusing only on an assumed rate.