Growth on prior growth
Compounding occurs when returns are added to a base and future returns are then earned on the larger base. The first years can feel uneventful because the base is still small. Later years can dominate the outcome because prior gains have become productive capital.
This is why annualized rates need context. A rate without a time horizon says little, and a projection without volatility, fees, taxes, or the possibility of loss is incomplete.
Contributions and behavior
For many investors, recurring contributions do more of the early work than investment returns. Contributions are controllable; market returns are not. Over longer periods, the balance can shift as a larger capital base makes the return assumption increasingly influential.
The calculator on this site is a model, not a forecast. Its job is to make assumptions visible so readers can see which variable is carrying the result.
The most fragile input
Small changes in assumed return can create enormous differences over several decades. That mathematical sensitivity is precisely why high-return promises deserve skepticism. Useful planning tests a range of outcomes rather than treating one optimistic rate as destiny.