Two percentage points becomes about forty-five percent over twenty years
The arithmetic
Ten thousand pounds at four percent becomes about twenty-two thousand in twenty years. At six percent it becomes about thirty-two.
Why it feels smaller
Because we compare the rates rather than the outcomes. The rates differ by half; the outcomes differ by nearly half again.
Where it matters most
Long horizons. Over two years the difference is trivial. Over twenty it is the single biggest factor in the result.
