The following tables demonstrate the power of our equation. We'll consider the same percentage returns for her. But remember that a full quarter of his money was invested only during the last 5 years, giving it less time to appreciate. Look at the chart to see the results if she'd continued to add more money each year. That's how compounding works.
Most value is created at the tail-end of an investment's life.
Always keep that in mind as you embark upon, and continue, your investment career. You can also see from both tables that the annual return an investor achieves means a great deal. Every percentage point is significant, especially over long periods of compounding. That's part of the reason why it is so important that you learn to manage your money Foolishly and avoid mediocre companies. That's not always easy, given all of the unforeseen events in this world, but if a majority of your investments are successful, you should be proud and you should reach your goals.