The S&P 500 has historically returned approximately 10% annually before inflation over the past century, making it a commonly used benchmark. However, this includes years of significant gains and losses, so actual year-to-year returns vary widely. For conservative planning, many advisors recommend using 7-8% to account for inflation, fees, and market uncertainty.

With $25,000 invested at 10% compounded monthly and $500 monthly contributions, your portfolio could grow to approximately $546,000 after 20 years. Of this, $145,000 comes from your total contributions and the remaining $401,000 is earned through compound returns. This dramatic growth illustrates why starting with a meaningful sum and contributing regularly is so powerful.

Both matter, but a larger initial investment has more time to compound and generally has a greater impact over long horizons. However, if you don't have a large lump sum, consistent monthly contributions are the next best strategy. The ideal approach is to invest what you can upfront and maintain steady monthly contributions regardless of market conditions.