What is compound interest

Compound interest is the interest you earn on both your initial principal and the accumulated interest from previous periods. Over time, this snowball effect grows your money exponentially. The earlier you start saving, the more powerful compounding becomes.

Example

If you invest 1000 dollars at 8% annual return for 30 years, you end up with around 10,062 dollars. Same investment for 40 years equals 21,724 dollars.