Compound interest is the process where your investment earns returns not only on your initial amount, but also on the accumulated interest over time. This leads to exponential growth, especially over long periods.
The longer your money remains invested, the more powerful compounding becomes. Small, consistent contributions can grow into substantial balances due to the cumulative effect of returns generating additional returns.
It works by earning interest on both your original investment and previously earned interest, leading to accelerated growth over time.
Yes, regular contributions significantly increase your final investment value.
This depends on your investment type. Shares typically offer higher long-term returns than savings accounts, but with more risk.
No. Investment returns can vary and are not guaranteed, especially in market-based investments.