Snowball effect is the term used in investment world to describe the rate of growth of an investment when its profits or dividends are reinvested. During the first few years of your investment, it will seem like it’s taking so long to grow but as more years go by and you continue to contribute and reinvest your profit or dividends you will notice that it is growing much faster than before. This is because the original principal is making money and the reinvested money is also making money at the same time. Of course there will be times when it will shrink due to market downturn but it will go back to it’s track once the market recovers.
If you are still working and can continue to contribute to your investment and avoid taking and spending its profit then you will experience this snowball effect. Initially, you will realize gains in the tens of dollars per month then hundreds and then thousands once the investment starts growing faster.
So continue maintaining your prudent lifestyle and try to allocate a sizeable portion of any increase in salary or extra income that you will get in the future to your investment. This way your regular contribution, additional contribution and dividends are all working together to achieve the snowball effect on your investment. Hopefully it will grow to the point that it earns income that is equivalent or more than what you get from your employment.