RoostPoint

Snowball effect

The snowball effect of compound interest is one of those quiet forces that can change your financial future. The best part of it is all it takes is time to work.

It can start small, maybe a few dollars set aside every week, but over time, those contributions begin to earn returns of their own. Then those returns start earning returns, and suddenly your growth picks up speed like a snowball rolling down a hill.

That’s the beauty of compounding: the longer you let it roll, the bigger it gets. Reinvesting dividends, staying consistent with contributions, and resisting the urge to pull your money out too soon. This is how small steps turn into real wealth.

And the same idea works in reverse for debt. When you pay off small balances first and roll those payments into the next debt, you build momentum, confidence, and freedom.

Whether you’re saving for retirement, paying down debt, or just trying to get ahead, the snowball effect rewards patience and consistency. Just start, stay steady, and let time do the heavy lifting.

Initial Balance = $2,500

Monthly contribution = $600

Annual growth rate = 8%

Investment duration = 30 Years

Snowball example

See above for an animation of what steady contributions over 30 years can create. We start with $2,500 dollars and add $600 a month. Over the years this grows and compounds to $875,725 assuming 8% growth. The S&P 500 has returned approximately 9.8% since its creation in 1926.

The total contributions would be $218,500 and the final amount would be $875,725 in this hypothetical scenario. That is 4 times the amount contributed!