How regular contributions can compound your earnings over time
Updated on 1 July 2025 | 2 minute read
Ever wondered how a little extra money in your super today could make a big difference tomorrow? It's all thanks to the snowball effect of compound earnings.

How super can make saving for retirement less stressful
In this episode, Anne Fuchs chats with Misha Schubert, the CEO of the Super Members Council (SMC), about how super has completely changed retirement for Australians.
What are compound earnings?
Compound earnings start small but grow bigger over time. In super terms, it's when you earn investment returns not just on your initial amount, but also on the returns you've already earned.
Some people might describe it as earning interest on interest. We like to think about it as a snowball effect of compounding earnings.
The main difference between super returns and bank interest is that your super investments might grow faster when the market is doing well. This is because, as well as earnings, the value of your investment can go up. But the value of your investment can also go down if the market isn't doing well.
Generally, here's how compound earnings work:
You put money into your super.
That money earns a return and that return is added to your super balance.
If the market goes up, you could earn returns on that bigger balance every day.
This cycle continues year after year, which could grow your super balance.
Ways you can add more money to your super
Salary sacrifice
(before tax)
Contributions set up through an agreement with your employer. You pay money into your super before paying tax, which may reduce your taxable income.
Voluntary contributions
(after tax)
Grow your super using money from your take-home pay. You can make regular or one-off payments, and you may be able to claim a tax deduction.
Do my investment options affect compound earnings?
Yes, your investment options can affect your compound earnings. That's because your super’s earnings are different from a bank account. They depend on how your money is invested, not a fixed interest rate.
Different investment options come with different levels of risk and potential returns. Generally, higher-risk options aim for higher long-term returns, which could mean more compound earnings over time. But remember, they can also experience more ups and downs along the way.
Lower-risk options might have more stable returns but potentially lower long-term growth. It's all about finding the right balance for your situation and comfort level.
Case study example: Lee
Meet Lee1, age 30. They earn $80,000 a year and currently have $50,000 in their super.
Let's look at two scenarios:
Lee sticks with their employer's 12% super guarantee contributions.
Assuming a 6.5% annual return (after fees and taxes), Lee’s super could be $516,913 at age 67
Lee adds an extra 1% of their salary as a voluntary (after tax) contribution.
Assuming a 6.5% annual return (after fees and taxes), here's how Lee’s super could be $558,977 at age 67
That's an extra $42,064 in Lee's pocket at retirement – all from contributing just 1% more of their salary each year.
This example is provided for illustrative and educational purposes only and the member shown is not real. The calculations are not intended to be relied on for the purposes of making a decision in relation to a financial product. You should seek advice from a qualified licensed professional, regarding your own circumstances, before making any financial decisions.
The results are shown in today’s dollars with inflation set at 3.7% p.a. Lee's salary income has been indexed at 3.7% with current superannuation guarantee of 12% p.a. Current superannuation and taxation legislation has been applied and is subject to change. Assumed rate of return is 6.5% based on the Medium/High Investment strategy (after investment fees, costs and taxes but before product administration fees and insurance costs).
Do you have an account with us?
You can choose to invest your super in our investment options, or leave it to us to invest for you.
If you leave it to us, we'll invest it in the Lifecycle Investment Strategy.
Compounding earnings can play a big role in growing your super balance over the long term.
Regularly review how your super's invested. Check the Super Savings Investment Guide to make sure your investments match your goals and timeframe.2
Need some help? You can get advice about your ART account over the phone with us any time. It's included as part of your membership.3
See how much extra you could have in retirement
Use our contributions calculator to get a more accurate look at how much you could be better off with regular voluntary contributions to your super.
Start growing your super today
Even small extra contributions can create a snowball effect that grows your balance over time.
Not a member? It only takes a few minutes to join online.
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