Ränta på ränta (compound interest)
Ränta på ränta (compound interest) is when your returns themselves start earning returns. Each year you grow not just your original money but also all the gains it has already made, so the balance rises faster and faster the longer it is left alone.
Why time beats amount
The effect is small at first and dramatic later, because it builds on itself. A krona invested at 25 has decades to compound; the same krona at 55 has only a few years. That is why starting early, even with small amounts, usually beats saving larger amounts later. The single most powerful lever is time in the market.
A quick mental shortcut
The “rule of 72” gives a feel for it: divide 72 by your yearly return to estimate how many years it takes your money to double. At 7% a year, that is roughly ten years to double, and double again in the next ten. Fees work the same way in reverse, which is why a low TER matters so much over decades.
Where it shows up
- Compound savings
- Children’s savings
- FIRE
You cannot control returns, but you can control how early you start and how long you leave it. Both feed compounding directly, which is why “start now” beats “start with more later” more often than people expect.