Compound interest explained (Please read when you’re in your twenties!)

Think of money like a snowball.

You roll it down a hill, it picks up more snow… and then that extra snow also picks up snow. That’s compound interest: money makes money, and then that money makes more money.

Tiny story (with tiny math)

You drop €100 into an account that earns 10% a year (easy number for the example).

• After 1 year: €100 → €110 (you earned €10)
• After 2 years: €110 → €121 (you earned €11, interest on interest)
• After 3 years: €121 → €133.10 Keep going and it curves upward, faster and faster.

There’s a rough shortcut called the Rule of 72:

Money doubles in about 72 ÷ interest% years.

At ~7%, it doubles roughly every 10 years (72 ÷ 7 ≈ 10).

So you must start saving as young as possible

Assume a very normal long-term return of ~7%/year (not guaranteed; markets go up and down).

Start at 16: Put €50/month in a simple investment. Do that for 10 years (age 16 → 26) and then stop.

You’ll have ~€8,654 at 26.

Leave it alone—no more deposits—and by age 66 it could grow to around €141,163 just by compounding.

Start at 26: Put €50/month from 26 → 66 (that’s 40 years, way more effort).

You’d end up with about €131,241.

Starting earlier for a short time can beat starting later for a long time, because time is doing the heavy lifting.

Another way to see it:

Put in €1,000 once at 16 and let it sit at ~7%: by 66 it can be about €29,457. That’s the snowball.

How to use this (super simple)

Start now, even tiny amounts. €10–€50/month is fine.

Automate it so it happens every month without you thinking.

Keep it boring + consistent (broad, low-fee index fund for long-term goals).

Don’t panic at ups/downs, the snowball needs time.

That’s it. Compound interest = your money growing while you sleep.

Small + early > big + later.