The formula is End Value Simple = P x (1+r x t)

FV = P x (1 + r) ^t

Simple interest is arithmetic and Future Value (the power of compound growth) is exponential.

When you roll a snowball down the slope of a mountain, it gradually picks up mass or size, thereby enabling it to grow in size at a faster and faster pace as it continues to roll down the hill.  By the time it gets to the bottom the size is enormous and its rate of growth is exponentially greater than at the start due to its increased size (its ability to pick up snow along the way).

No it does not.  Given that the U.S. stock index has historically generated annual total returns of about 11%, and the Barclays Aggregate Bond Index has generated total returns of about 6.5%, because it emphasizes bonds in its portfolio WMB's expected returns are somewhere between 7.00% - 8.50% per annum.  This is typical of more conservative asset allocations.

Just as the snowball will get significantly bigger in size the sooner you start rolling it down the mountain slope, similarly we want to star investing as soon as we start generating earnings income.  This has primarily to do with the "t" or # of periods - the exponent - in the Future Value formula.

For younger folks in their 20's - if you follow a conservative passive investment strategy like WealthMaxBuilder, saving and contributing 10% of your income to a tax-free Roth IRA, you should be able to surpass the $1 million mark by the time you retire (over a 40-year time period).  If you start in your early 30's, you may not be able to get neither as $1million, but you will still be able to surpass the $550K mark.

With qualified accounts such as the Roth IRA, everything is tax free if you should start making withdrawals after age 59.5   No tax on interest, dividends or capital gains.  This is a huge advantage over taxable brokerage accounts, where you can pay income taxes as high as your tax bracket.  Taxes significantly reduce compound growth rates for investment portfolios.

Three key assumptions made are: (a) that Gilbert and his family remain healthy and that there are no astronomical medical bills or a tragedy that may result in a huge expense, (b) that Gilbert stays employed and that he receives pay raises to the tune of 1.5% per year during the 40-year contributory period and that (c) he invests conservatively and wisely with a balanced passive investment strategy like the WealthMaxBuilder.