Let’s illustrate the tremendous impact of compounding with just one simple but mind-blowing example. Two friends, Joe and Bob, decide to invest $300 a month. Joe gets started at age 19, keeps going for eight years, and then stops adding to this pot at age 27. In all, he’s saved a total of $28,800. Joe’s money then compounds at a rate of 10% a year (which is roughly the historic return of the US stock market over the last
