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The magic of compound interest

Warren Buffett made 99% of his net worth after the age of 50. He started investing at 11. This lesson explains the math behind that fact — and why starting earlier matters more than starting with more.

Reading time: 20 mins

Lesson 4 / 7

Would you rather have $1,000,000 today, or a penny that doubles every day for 30 days?

Most people take the million. Move the slider below to see why that's a mistake — and what it has to do with investing.

A penny, doubled every day

Drag the slider to see the value on any given day

$0.01

Day 1 of 30

Day1 of 30
Still just cents. Compounding looks slow at the start — this is why people give up too early.
The insight
A penny doubling every day for 30 days = $5,368,709.12. More than 5 times the million. And almost all of that growth happened in the last few days. This is exactly how compound interest works in investing.

Your personal compound interest calculator

Enter your own numbers. See exactly what patient, consistent investing could look like for you. The numbers are often surprising.

One important caveat: these projections assume a steady, constant annual return and ignore fees, taxes, and inflation. Real returns vary year to year — some years are negative — and the figures here illustrate the mechanics of compounding, not a guaranteed outcome.

Compound Interest Calculator

Based on historical average market return of ~8% annually after inflation

What you invest today
Added each month
8% = market avg (inflation-adjusted)
How long you invest

$309.0K

Final portfolio value

$73.0K

Total you invested

$236.0K

Gain from compounding

Yr 6

Yr 12

Yr 18

Yr 24

Yr 30

Principal invested Compound growth
Your $73.0K invested becomes $309.0K — the market's work adds $236.0K on top of your contributions. That's 323% more than you put in.

Why starting at 22 beats waiting — time matters more than the amount you invest

This is the part that surprises most people. Below are four people who each invest $200/month at 8% return. The only difference is when they start. Click each person to see their result at age 65.

The cost of waiting

Everyone invests $200/month at 8% annual return until age 65

Click a person to see their result.

The uncomfortable truth
Alex starts at 22 and invests $NaN total. Morgan starts at 42 and invests $NaN. Alex ends up with more than NaN× as much money — despite investing only about double. The 20 extra years of compounding did far more than the extra contributions. Time is the most valuable input in compounding.

The Rule of 72 — mental math for investors

You don't need a calculator to estimate how long it takes to double your money. Divide 72 by your annual return rate. The result is approximately how many years to double. Want it done for you? Try the Rule of 72 calculator.

Years to double ≈ 72 ÷ Annual Return %

Example: 8% return → 72 ÷ 8 = 9 years to double your money

2% return

36.0

yrs to double

4% return

18.0

yrs to double

6% return

12.0

yrs to double

8% return

9.0

yrs to double

10% return

7.2

yrs to double

12% return

6.0

yrs to double

Check your understanding

You invest $10,000 at 7% annual return and leave it for 30 years without touching it. Approximately how much will it be worth? (Use the Rule of 72 to reason through it first.)

Two friends each have $5,000 to invest at age 25. Friend A invests all $5,000 now. Friend B spends it and plans to "invest more later." At 8% return, what is Friend A's money worth at age 65?

Try the Compound Interest Calculator

The full version lets you model dividend reinvestment, tax drag, and inflation — building more realistic projections for your own situation.

Open Calculator

Next up: how to read a stock page — P/E ratio, market cap, 52-week high, dividend yield, every number decoded.

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