What is compound interest, really?
Simple interest pays you only on the principal. Compound interest pays you on the principal plus all previously earned interest, reinvested. The growth curve is exponential, not linear. The first decade looks slow; the fourth looks impossible. This is why starting at 25 is worth dramatically more than starting at 35, even if the 35-year-old contributes more per month.
Invest $500 a month in an S&P 500 index fund at ~10% from age 25 to 65. That’s $240,000 of your own money. The ending balance is roughly $3.16M. Start at 35 instead, same $500 a month, same return, $180,000 contributed. Ending balance: about $1.13M. The 10-year head start cost the late starter roughly $2 million. Time, not contribution size, did the heavy lifting.
Waiting to invest until you ‘have enough’ or ‘understand the market’. The variable that compounds is years, not knowledge. $50 a month into a target-date fund today beats $500 a month started five years from now.
A 60-second lesson on this, with a worked drill, lives inside the Finlo app. Free, forever, on the basics.