Growing Your Money · 2 min read
Compounding: Growth on Top of Growth
How compounding works, why starting early matters so much, and the rule of 72 for estimating how fast money doubles.
Compounding is earning returns on your past returns. Like a snowball rolling downhill, it starts small and speeds up.
Why time matters most
Someone who saves steadily from age 25 can end up with far more than someone who saves larger amounts starting at 40, simply because their money has more years to compound.
The rule of 72
Divide 72 by an annual growth rate to estimate how many years it takes money to double. At 6%, money doubles in roughly 12 years; at 8%, roughly 9.
Compounding works both ways
Credit card balances compound too, against you. That's why paying off high-interest debt is often the best "investment" you can make.
See it for yourself with the compound interest calculator.
Updated November 15, 2026. General education only, not financial advice.