Compound interest, explained without the jargon
Compound interest is interest paid on interest. The longer the runway and the higher the rate, the more violently your balance grows in the back third of the timeline — which is why starting at 25 beats starting at 35 by hundreds of thousands.
The formula
Future value = P × (1 + r/n)^(n × t) plus a contribution annuity term, where P is your starting balance, r is the annual rate, n is how many times per year it compounds, and t is years. For most investors, monthly compounding is a fine approximation; quarterly or daily makes a tiny difference at typical rates.
The rule of 72
Divide 72 by your annual return to get the rough number of years it takes to double your money. At 8% real, that's nine years. At 4%, eighteen years. It's a back-of-the-envelope shortcut every investor should memorise.
Why $200 a month at age 25 beats $400 a month at age 35
At a 7% real return, $200/month from 25 to 65 ends at roughly $525,000. $400/month from 35 to 65 ends at $490,000 — despite contributing $24,000 more total. The extra decade of compounding outruns the higher contributions. Time in market beats timing the market.
What this calculator does not model
Tax on investment earnings (significant in non-super accounts), platform and ETF fees, sequence-of-returns risk, or contributions being made at irregular intervals. Use a constant real (after-inflation) return like 5–7% for equities and you'll be in the right ballpark over long horizons.