Summary:

Compounding is when your money earns returns, and those returns also start earning.
Over time, this creates a snowball effect that turns small investments into much larger sums.
Starting early makes compounding more powerful, because it has more years to work.
Consistency and patience are the keys.

What Does Compounding Even Mean?

Compounding might sound technical, but the idea is simple: your money makes money, and then that new money makes even more.
Over time, the effect accelerates.

For example, invest €100 at a 5% yearly return.

After the first year, you have €105.
In the second year, your 5% is applied to €105, not €100.
Year after year, the growth builds on itself.

It may not look dramatic in the early years, but over decades, this difference becomes huge.

The lesson? The earlier you start, the longer compounding has to work in your favor. Waiting is like leaving potential growth on the table.

How to Make Compounding Work for You

Start early: Even small amounts benefit enormously from more time.
Be consistent: Regular deposits are more effective than occasional large ones.
Let it grow: Avoid the temptation to withdraw too soon.

Why Bother?

Because compounding is one of the few financial forces you can rely on. It works quietly in the background while you go about your life.
Think of it like planting seeds: the sooner you plant them, the bigger and stronger your financial garden will grow.

👉 See compounding in action with an interactive tool that lets you test amounts, timelines, and growth rates.