Compound interest is the eighth wonder of the world, as Albert Einstein famously said. It is the process of earning interest on both the principal amount and the accumulated interest.
- How Compound Interest Works: When you invest money, you earn interest on your initial investment. Over time, the interest you earn also earns interest, creating a snowball effect that can significantly increase your wealth.
- The Importance of Early Investment: The earlier you start investing, the more time your money has to grow through compound interest.
- Long-Term Benefits: The power of compound interest is most significant over the long term. Even small, consistent investments can grow substantially over time.
By understanding the power of compound interest and starting to invest early, you can significantly increaseyour wealth over time and achieve your long-term financial goals.