Compound growth basics

Compound growth happens when earnings are added back to a balance and can earn additional returns in future periods. Time is one of the most important inputs because compounding has more periods to build on itself.

Contributions and growth both matter

A starting balance can grow through returns, but regular contributions can be just as important, especially early on. Reviewing contributed amount and projected growth separately can make the estimate easier to understand.

Use assumptions carefully

A steady return assumption is useful for math, but real-world returns can move up and down. Compare several scenarios instead of relying on one projected balance.