Imagine you set some money aside and don't touch it for thirty years. Depending on the return, you get back a little more than you put in, or a sum out of all proportion to it. A few points of return a year make all the difference.
Freedom is a number.
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Today: the power of compound interest, with numbers, and where it stops.
Interest on interest
Take €10,000 left alone for thirty years, with nothing added. With simple interest, you earn 7% of the starting sum every year, always the same amount: €700 a year, or €21,000 of gains over thirty years.
With compound interest, you earn 7% of everything you have at that moment. The first year, €700. The second, 7% of €10,700, or €749. The tenth, already more than €1,200. Gains are added to the capital, and the larger capital produces larger gains. After thirty years, there aren't €21,000 of gains any more but €66,123.
The table shows the same sum at four annual returns. At 2%, €10,000 becomes €18,114 in thirty years. At 7%, €76,123. At 10%, €174,494. Eight more points of return between the first and last case, and the result is multiplied by nearly ten.
What €10,000 set aside becomes
In euros, with no additional contributions, constant annual return
| Return | 10 years | 20 years | 30 years | 40 years |
|---|---|---|---|---|
| 2% | 12,190 | 14,859 | 18,114 | 22,080 |
| 5% | 16,289 | 26,533 | 43,219 | 70,400 |
| 7% | 19,672 | 38,697 | 76,123 | 149,745 |
| 10% | 25,937 | 67,275 | 174,494 | 452,593 |
Look at the 7% column. The first ten years take the capital from 10,000 to €19,672. The next ten, from 19,672 to €38,697. Then from 38,697 to €76,123. The capital roughly doubles every ten years, but each decade's gain is twice as big as the previous one's. The last decade alone brings in more than half of all the gains.
The rule of 72
There's a shortcut to feel the speed: divide 72 by the return, and you get the number of years it takes to double your capital. At 7%, 72 ÷ 7 gives 10.3 years. The exact calculation gives 10.24. At 10%, 7.2 years against 7.27. At 2%, 36 years against 35.0.
That explains the table: at 2%, it takes a generation to double. At 10%, four doublings fit into thirty years.
Time matters more than the sum
In real life, you don't drop a sum and walk away: you save a little each month. Take €200 a month, at 7% a year.
€200 a month at 7%: what was paid in, what interest added
In euros, after 10, 20, 30 and 40 years
After ten years, interest makes up 31% of the total. After forty years, 82%. Of €525,000, only €96,000 came out of your pocket.
Here is the number that matters most: if you start ten years earlier, at 25 rather than 35, and stop at 65 in both cases, you pay in 33% more (€96,000 against €72,000) and end up with 2.15 times as much (€524,963 against €243,994). You weren't smarter or richer. You just gave compounding ten more years.
The same mechanism works against you
Fees compound exactly like returns. A fund that takes 1% a year from a gross return of 7% leaves you 6%. On €10,000 and thirty years, you go from 76,123 to €57,435. One point of fees a year sends 25% of the final result to the manager, while the fee line on your statement never says "25%".
Losses compound too, and less kindly. A portfolio that loses 50% has to gain 100% to get back to the starting point, not 50. Losing 10% costs €1,000 out of 10,000, but you then need to gain 11.1% to recover it. And if you sell at the worst moment, compounding stops dead.
And in reality, what return can you expect?
The 7% and 10% in the table don't come from nowhere: they're roughly the orders of magnitude of the US market over the long run. But these figures need to be read with care.
In the United States, the S&P 500, the index of the 500 largest listed companies, returned on average 10.0% a year between 1928 and 2025, dividends reinvested (dividends are the share of profits paid out to shareholders). Once US inflation, meaning the rise in prices, which averaged 3.0% a year over the period, is taken out, that's 6.8%. A dollar in 1928 would have become $11,570. Allowing for prices, $617.
That average hides violence. The index lost 43.8% in 1931 and took years to recover. The starting period matters enormously too: from 2000 to 2025, the average annual return falls to 8.0% (5.3% allowing for prices), because it starts at the top of the dot-com bubble and 2000-2002, then 2008, weigh heavily on it.
- These are American figures. The US market is among those that have done best over the last century. Elsewhere and over other periods, returns have often been lower.
- These are past averages. Nothing guarantees that the next thirty years will look like the last thirty.
- These are returns before fees and before taxes. Nobody receives the return of the index itself.
- Inflation counts. €76,000 in thirty years won't buy what €76,000 buys today.
Warren Buffett and time
Warren Buffett is always cited as the example. According to the 1995 Forbes 400 ranking, he was worth $11.8 billion at 65. The Forbes profile consulted on October 26, 2026 estimates $154 billion. Most of his fortune arrived after the age at which most people retire. His talent for picking the right companies has a lot to do with it, but so does duration: decades during which the gains kept working.
The lesson we can draw is modest: start early, hold for a long time, pay low fees, avoid selling in a panic. Nothing spectacular, and that's exactly what makes it hard. Everything above is made of facts and calculations, not investment advice.