The Compound Interest Formula
Exponential growth occurs when earnings are reinvested to generate their own returns:
A = P(1 + r/n)^(nt) + PMT × [((1 + r/n)^(nt) - 1) / (r/n)]
Over a 30-year investment horizon at the historical S&P 500 average return of ~9.8% nominal, compounding interest accounts for more than 75% of your final portfolio value.