A fully owned investment works the same way. It starts small and grows slowly at first, like your equity. Then at the end it grows quickly. Principle payments are essentially the same things as reinvesting dividends. Reinvestment is compounding. Linear growth js actually the default, not exponential. If you have one widget, say a rental house, your income is constant. It never grows in real terms. Your widget income only has the potential to grow exponentially if you use your earnings to buy more widgets. Now a house is too big a widget to buy one per month and actually see exponential returns. If you had 1000 rentals already you could do this. So how do you reinvest your profits? Well, finance. You buy a portion of a house instead of a whole one. When you make a principle payment that's what you're doing.