Compound interest is the foundation of FIRE. See how your starting balance and monthly contributions snowball over time — and how much of your final wealth comes from growth rather than what you put in.
Compound interest means you earn returns not just on your original investment, but also on all the returns you've already earned. The longer you stay invested, the more your gains compound on themselves.
Formula: A = P(1 + r/n)^(nt) + PMT × [(1 + r/n)^(nt) − 1] / (r/n)
where P is principal, r is annual rate, n is compounding periods per year, t is years, PMT is monthly contribution.
For FIRE planning, the 7% figure (inflation-adjusted historical S&P 500 average) is the standard assumption. Starting early matters more than saving more — 10 extra years of compounding often outperforms doubling your monthly contribution.