The part people underestimate
Compounding is not a steady climb. It is almost flat for a long time and then steepens sharply. Most of the growth in a thirty-year investment arrives in the final third — which is precisely the stretch investors are most tempted to interrupt.
Change the years in this calculator while leaving the rate alone. Time affects the outcome far more than a percentage point of return does.
Frequency of compounding
The more often returns are compounded, the higher the effective yield for the same nominal rate. The difference between annual and monthly compounding is modest over short periods and becomes noticeable over long ones.
When comparing two instruments, compare the effective annual yield rather than the advertised rate.