Time value of money and compounding
What you'll be able to do
Time is the investor's biggest advantage — money left to compound grows faster the longer it's left alone.
- Money has time value: sooner is worth more because it can compound.
- Compounding makes growth accelerate — returns earn returns.
- Rule of 72: 72 ÷ rate ≈ years to double.
A dollar today is worth more than a dollar next year, because today's dollar can be invested and grow. That's the time value of money, and it's why starting early matters more than almost anything else a saver does. Compounding is the engine: returns earn returns, so growth accelerates the longer money is left alone.
The arithmetic surprises people. At a 6% annual return, money roughly doubles every 12 years (the 'Rule of 72' — divide 72 by the rate to estimate the doubling time). Someone who invests $5,000 a year from age 25 can easily end up ahead of someone who invests far more but starts at 40, because the early dollars compound for an extra 15 years.
For a seller, this is the most motivating story you can tell — and the most honest. It reframes 'I can only afford a little' into 'a little, started now, beats a lot started later.' It also explains why fees matter so much (next module): a fee is a permanent drag on the same compounding curve.
Key points
- Money has time value: sooner is worth more because it can compound.
- Compounding makes growth accelerate — returns earn returns.
- Rule of 72: 72 ÷ rate ≈ years to double.
- Starting early often beats contributing more later.
Examples
Aisha invests $200/month from 25 to 35 then stops; Ben invests $200/month from 35 to 65. At ~6%, Aisha often finishes with a comparable or larger balance despite contributing for a third as long — her dollars compounded longer.
Pitfalls
- Quoting compounding with an unrealistically high rate to make the chart look dramatic.
- Forgetting that compounding works against the client on fees and debt too.
Ask your sales coach
In a real Adept rollout this routes to your firm's compliance-approved Claude project; in the demo it opens a fresh Claude chat. Never share real client details.