Investing Basics: What Your Money Can Become
Compound growth is the quiet engine behind every retirement plan.
The math that matters
At 7% average annual return (about the long-run stock market average after inflation), money doubles roughly every 10 years. $10,000 invested at 25 becomes $150,000+ by 65 — without adding another dollar.
Index funds beat most experts
Over 90% of actively managed funds underperform their index over 15 years. A low-cost S&P 500 index fund (expense ratio under 0.10%) captures the market's growth without the guesswork.
Time in the market beats timing the market
Dollar-cost averaging — investing a fixed amount every month regardless of price — smooths volatility and removes emotion. Missing the market's 10 best days in a decade can halve your returns.
Your growth, modeled
Your Results
Assumes monthly compounding at a constant return. The S&P 500 has averaged about 10% historically (7% after inflation).
Frequently Asked Questions
What return should I use?
For a diversified stock portfolio, 7% is a common conservative real return (after inflation). Use 4-5% for bond-heavy portfolios and 10% for optimistic stock-only cases.
Why does time matter so much?
Compound growth is exponential. $300/month at 7% grows to ~$158k in 20 years but ~$365k in 30 — the last decade does more than all the earlier ones combined.
What if I increase my contributions over time?
Raising contributions with your income accelerates growth dramatically. If $300/month grows to ~$158k in 20 years at 7%, increasing by just $25/month every year reaches roughly $215k — an extra $57k from gradual raises.