A simple example

Let’s say Mia has $10,000 in super and it earns an average annual return of 5% after fees and taxes. This is an example only and is not a prediction.

Year	Starting balance	Return at 5%	Ending balance
1	$10,000	$500	$10,500
2	$10,500	$525	$11,025
3	$11,025	$551	$11,576

25	$32,251	$1,613	$33,864

In the first year, Mia earns $500. In the second year, she earns 5% on $10,500 – not just on her original $10,000. By year 25, the same 5% return would be calculated on a much larger balance, showing how compounding can build momentum over time.

In this example, Mia’s $10,000 could grow to about $33,864 after 25 years, assuming a 5% return each year after fees and taxes and no extra contributions. Actual outcomes will vary.

If Mia made regular contributions over time, such as employer super contributions or voluntary contributions, those amounts could also be invested and have the potential to compound.

Why starting earlier can help

The longer your super is invested, the more time compounding has to work. This is why even small contributions made earlier in your working life can potentially have a bigger impact than larger contributions made much later.

Of course, your super balance will not grow in a straight line. Investment markets move up and down, and different investment options have different levels of risk and return. But because super is usually a long-term investment, staying invested can give your money more time to recover from short-term market movements and benefit from future growth.

How to make the most of compounding

Check your super contributions. Make sure your employer contributions are being paid into your account. Payday Super started on 1 July 2026, and means that employers now pay SG contributions at the same time they pay your salary or wages.
Consider whether extra contributions are right for you. Adding more to super may give compounding more to work with, but contribution limits and tax rules apply.
Review your investment choice. Your investment choice can affect your long-term returns and the level of risk you take.
Keep fees in mind. Low fees can boost your super, which can also increase the amount available to compound over time.
Think long term. Super is generally designed to be accessed in retirement, so it is important to consider your long-term goals.

What to remember

Compound returns can be a powerful part of how super grows over time. By reinvesting returns, adding regular contributions and staying invested for the long term, your super has more opportunity to build momentum.

But compounding is not guaranteed. Investment returns can be positive or negative, and your final super balance will depend on many factors, including contributions, fees, taxes, investment performance and how long your money is invested.

How compound returns can help grow your super