What this game teaches
Compounding means earning returns on your returns. Its power comes mostly from time, which is why starting early matters more than investing large amounts later. The race puts three investors side by side, each investing ₹10,000 a month at 12% a year by default:
- Asha invests from 25 to 35, then stops: ₹12,00,000 in total. The money stays invested until 60 and grows to ₹4,59,76,340.
- Bilal starts at 35 and invests until 60: ₹30,00,000 in total, two and a half times as much, and ends with ₹1,89,76,351.
- Chitra invests from 25 to 60: ₹42,00,000 in total, and ends with ₹6,49,52,691.
Asha invests less than half as much as Bilal and still finishes ahead. The first ten years of Chitra's investing, the same ten years as Asha's, produce 71% of Chitra's final wealth. Change the return and the starting ages to see how the gap moves: the higher the return, the more an early start is worth.
The Rule of 72
A quick way to estimate how long money takes to double: divide 72 by the annual return. It is an approximation, accurate enough for everyday use between about 6% and 12%:
| Annual return | Rule of 72 estimate | Exact doubling time |
|---|---|---|
| 4% | 18.0 years | 17.7 years |
| 6% | 12.0 years | 11.9 years |
| 8% | 9.0 years | 9.0 years |
| 10% | 7.2 years | 7.3 years |
| 12% | 6.0 years | 6.1 years |
| 15% | 4.8 years | 5.0 years |
The same rule works for costs and inflation. At 6% inflation, prices double in about 12 years; a fund charging 1.5% more a year takes a large bite over that time. See direct vs regular mutual funds.
Two honest caveats
Real returns are not smooth: the order of good and bad years matters, especially near the end. And the projection is in future rupees; at 6% inflation, ₹1 crore in 35 years buys roughly what ₹13 lakh buys today. Start early, but plan in today's money with the SIP calculator's inflation-adjusted figure.
Frequently asked questions
Is the early starter always ahead?
Not always. It depends on the return, how long each person invests and how much. At lower returns, investing for longer can outweigh starting earlier. The race lets you test the cases.
Why does compounding speed up over time?
Each year's return is earned on a larger base, which includes all past returns. In the last few years, the yearly growth of a large corpus can exceed all the money you invested in a decade.
What return should I assume?
For long-term equity investing in India, many planners use 10% to 12% a year before inflation, with large swings along the way. For debt, 6% to 7%.
Related reading
- SIP & step-up SIP calculator
- Step-up SIP: the wealth accelerator
- FIRE in India: the corpus maths
- Rupee-cost averaging lab
This game uses simulated prices and random outcomes for learning. It is not a trading platform, uses no real money and does not predict real markets. Everything runs in your browser; nothing you enter is sent to us. Read our disclaimer. Built and checked by Pradeep Rawal.