Journal · 28 October 2026 · By Kenneth McDonald
Does starting ten years earlier change the outcome as much as the books say?
At a return of 7 per cent a year, ten extra years of saving 200 a month add a third to the money paid in and multiply the final balance by 2.15.
That sum answers a claim that eleven of the 102 popular money books checked for The Money Shelf carry, and that eight of the eleven put in their own words: starting to save or invest early produces a far larger result than starting later with the same monthly amount. Money: Master the Game speaks of “the miracle power of compounding”, and The Psychology of Money gives one chapter the title “Confounding compounding”. The Richest Man in Babylon, a book from 1926, says “Every gold piece you save is a slave to work for you.”
Compounding means that the returns on savings earn further returns of their own, so money saved early has the most years in which to do it. The books offer the idea as advice, and the sums below set it beside the figures.
What do the numbers show?
A saver pays 200 a month, in dollars or in pounds, for 30 years or for 40 years, with no increase for wages or inflation. The return is a round 4 or 7 per cent a year after fees and tax. These are illustrations, calculated for the book, and a saver in Australia is shown in a separate column because 15 per cent contributions tax takes a share of every deposit and leaves A$170 of each 200 invested.
| Years saving, return a year | Paid in | United States ()andUnitedKingdom(£)|Australia(A) | |
|---|---|---|---|
| 40 years at 4% | 96,000 | 236,392 | 200,933 |
| 40 years at 7% | 96,000 | 524,963 | 446,218 |
| 30 years at 4% | 72,000 | 138,810 | 117,988 |
| 30 years at 7% | 72,000 | 243,994 | 207,395 |
The extra ten years add a third to the money paid in, from 72,000 to 96,000. They multiply the final balance by 2.15 at 7 per cent and by 1.70 at 4 per cent, and the multiples are the same in all three countries because the Australian tax takes the same share from every deposit.
What do the first ten years do?
The deposits of the first ten years total 24,000, a quarter of the 96,000 paid in over 40 years. Left to grow to the end of year 40, they reach 97,582 at 4 per cent and 280,968 at 7 per cent, which is 41 per cent and 54 per cent of the final balance.
What does waiting cost?
A saver who starts ten years later and wants the balance the 40-year saver reaches needs to pay 340.60 a month at 4 per cent or 430.31 a month at 7 per cent. Total paid in is then 122,616 or 154,911, against 96,000.
Who can start?
The sums assume a household can set aside 200 a month at the start. Chapters 3 and 6 of the book test that against official spending figures, and chapter 5 asks what happens when debt with a higher interest rate competes for the same money.
Each country also has its own account for the savings. In the United States the book uses the Roth IRA, an individual retirement account funded with after-tax money, with a 2026 contribution limit of $7,500 set by the Internal Revenue Service. In the United Kingdom it uses the stocks and shares ISA (Individual Savings Account), where GOV.UK states that no tax is paid on income or capital gains and that the allowance is £20,000 in the 2026–27 tax year. In Australia it uses superannuation, the retirement account into which employers must pay, with the employer’s required payment set by the Australian Taxation Office at 12 per cent from 1 July 2025.
Where does the test stop?
Actual returns change from year to year, and published figures measure different things. The UBS Global Investment Returns Yearbook 2026 reports United States equity returns of 6.6 per cent a year after inflation over 1900 to 2025. The Australian Prudential Regulation Authority reported a rate of return of 8.6 per cent for super funds in the year to June 2026 and 6.3 per cent a year over five years, and its definition mentions no adjustment for inflation.
Prices are rising against all of these. The United States Bureau of Labor Statistics reported that consumer prices rose 3.7 per cent over the 12 months to September 2026, the United Kingdom’s Office for National Statistics reported 3.1 per cent over the 12 months to August 2026, and the Australian Bureau of Statistics reported 4.0 per cent over the 12 months to August 2026.
The book’s verdict on the claim is Holds: in every case above the 40-year saver ends with more than the 30-year saver for the same monthly amount, by a multiple that depends only on the return and the number of years. Chapter 1 gives the full working and the books that make the claim, and each country has an official calculator for testing the sum on a reader’s own numbers:
- United States: the Investor.gov compound interest calculator, at investor.gov
- United Kingdom: GOV.UK on Individual Savings Accounts, at gov.uk/individual-savings-accounts
- Australia: the Moneysmart compound interest calculator, at moneysmart.gov.au
At 7 per cent, a quarter of the money, saved first, produces more than half of the result.
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