WALL STREET × GAME DAY
What is compound interest? Compound interest means earning returns on your returns, not just on your original investment. £1,000 earning 10% annually becomes £1,100 after year one. In year two, you earn 10% on £1,100 — not just the original £1,000. Over decades, this compounding creates exponential growth that massively outpaces simple returns.
Compound growth is like rolling a snowball down a slope. At the top, it's small and moves slowly. Halfway down, it has accumulated enough mass to pick up more snow with every rotation. By the bottom, what started as a handful of snow is an enormous ball. The further it travels, the faster it grows — but the critical factor is starting early enough to have distance to travel.
| START AGE | MONTHLY INVESTMENT | RATE | VALUE AT 65 |
|---|---|---|---|
| 22 | £200 | 8% | ~£870,000 |
| 32 | £200 | 8% | ~£380,000 |
| 42 | £200 | 8% | ~£155,000 |
| 22 (double) | £400 | 8% | ~£1,740,000 |
Starting at 22 vs 32 with the same investment produces more than double the outcome. 10 years of additional compounding is worth more than doubling the monthly contribution.
Stocks compound in two ways: share price appreciation (your investment grows as the business grows) and dividend reinvestment (cash dividends buy more shares, which earn more dividends, which buy more shares). The most powerful long-term stock portfolios combine both.
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