How compounding works
In year one, returns come only from your own money. In year two they come from your money plus last year's returns. Repeat that for fifteen or twenty years and the curve starts to climb on its own.
This is why someone who starts at 25 and someone who starts at 35 do not end up in the same place, even paying in the same amount. The later starter has to contribute far more to catch up.
Do not treat the percentage as a promise
7% does not mean 7% every year. Some years are +20%, some are −15%. The average only shows up for the investor who does not panic and sell somewhere in the middle.