Why starting early beats saving more

Compounding is asymmetric — the earliest dollars do the most work because they have the most years to multiply. Two scenarios show this clearly:

• Saver A: contributes $300/mo from age 25 to 35, then stops. Total in: $36,000.
• Saver B: contributes $300/mo from age 35 to 65. Total in: $108,000.

At 7% annual return, Saver A finishes with about $415,000. Saver B finishes with about $370,000. Saver A put in one-third the money and ended up ahead — entirely because of those first 10 years of compounding.

The cost of waiting 10 years

Try this: $500/mo at 7% for 30 years grows to about $611,000. The same $500/mo over 40 years grows to about $1.31 million. Ten extra years more than doubles the outcome despite contributing only 33% more cash. This is exactly why our RRSP calculator defaults to long horizons — short horizons drastically understate the power of patience.

Inflation-adjusted returns

The chart above shows nominal growth. To see real (inflation-adjusted) returns, subtract about 2% from your return rate before running the numbers. A 7% nominal return is more like 5% real. Over 30 years, that means a $611,000 nominal balance is worth about $373,000 in today's dollars — still a great outcome, but a more honest picture.

If you're stashing cash for shorter horizons (1–3 years), the right tool is a GIC or HISA instead — compounding really shines over decades, not months.