The power of compounding
Save €200 a month at 5% a year from age 35 and you have about €166,452 at 65. Start at 45 and you have about €82,207: you paid in two thirds as much, but you end up with half.
Time does most of the work
Starting at 35, you pay in €72,000 and the growth adds €94,452. Starting ten years later costs you €24,000 less of your own money, but leaves you €84,245 poorer at 65, with about half as much. Starting at 25 gives about €305,204, starting at 55 only €31,056. In the later years the growth already earned keeps earning growth of its own, so the last years add the most.
Show the data as a table
| Start age | Years | Paid in | Value at the end | Of which growth |
|---|---|---|---|---|
| 25 | 40 | €96,000 | €305,204 | €209,204 |
| 35 | 30 | €72,000 | €166,452 | €94,452 |
| 45 | 20 | €48,000 | €82,207 | €34,207 |
| 55 | 10 | €24,000 | €31,056 | €7,056 |
The return matters too
Over 30 years, €200 a month becomes €72,000 with no return at all, €98,545 at 2%, €166,452 at 5% and €243,994 at 7%. A few points of return a year make a very large difference over a long time, which is why risk, costs and taxes deserve attention.
Show the data as a table
| Yearly return | Value at the end | Of which growth |
|---|---|---|
| 0% | €72,000 | €0 |
| 2% | €98,545 | €26,545 |
| 5% | €166,452 | €94,452 |
| 7% | €243,994 | €171,994 |
Fees compound as well
A yearly fee is taken from the return every year, so it compounds against you. With a 1.5% fee the 5% return becomes 3.5%, and after 30 years you have €127,083 instead of €166,452: €39,369 less, or 24% of the result. A 1% fee leaves €138,810, a 2% fee €116,547.
Show the data as a table
| Yearly fee | Value at the end | Lost to fees |
|---|---|---|
| 0.0% | €166,452 | €0 |
| 0.5% | €151,877 | €14,574 |
| 1.0% | €138,810 | €27,642 |
| 1.5% | €127,083 | €39,369 |
| 2.0% | €116,547 | €49,904 |
Two rules of thumb, and inflation
The rule of 72: divide 72 by the yearly return to see roughly how many years money takes to double (12 years at 6%, 24 years at 3%). Inflation compounds too: at 2% a year, the €166,452 reached after 30 years buys what about €91,893 buys today. Prices in the EU rose by about 26% from 2021 to 2025, so the real return is what counts.
Try your own amounts, returns, fees and inflation:
Compound interestFinancial plannerPurchasing powerSources and method
- Worked examples made with the method of the PayAbacus compound interest calculator: payments at the end of each month, interest compounded monthly, yearly fees deducted from the yearly return.
- The returns are examples, not forecasts; real investments can lose value and returns change from year to year. Taxes on gains are not included.
- This is general information, not financial advice.