They called it the eighth wonder of the world. Compound interest is why starting at 25 beats starting at 35, even if you save half as much.
What is compound interest?
It's earning interest... on your interest. The first year you earn on what you put in. The second, you earn on what you put in plus what you already earned. Over time the money starts to grow on its own, and faster and faster.
The example that changes everything
Two friends, same return (8% a year):
- Ana invests $200 a month from age 25 and stops at 35. She contributed $24,000 in total.
- Beto starts at 35 and contributes $200 a month until 65. He contributed $72,000 in total.
At 65, Ana ends up with more money than Beto — having contributed a third as much. The difference? Those ten years of head start had decades to compound.
It's not how much you invest. It's how much time you give it.
The rule of 72
A trick to estimate in your head: divide 72 by your annual return and you get the years it takes your money to double. 8%? 72 ÷ 8 = 9 years. Every nine years, it doubles.
How to start
The best time to start was ten years ago. The second best is today. You don't need a lot of money: you need time and consistency. Automate a small contribution and let the math work for you.
Finzcore's compound-interest calculator shows you, with your own numbers, how much your money can grow over the years.