Compound interest is the process of earning interest on your interest. This means that your money grows at an exponential rate, rather than a linear rate.
Compound interest is a powerful force that can help you to reach your financial goals. For example, if you invest $10,000 at an annual rate of 10%, your investment will be worth $13,310 after 5 years. However, if you invest the same amount of money at an annual rate of 12%, your investment will be worth $16,105 after 5 years.
The earlier you start investing, the more time your money has to grow. This is why it is important to start saving for retirement as early as possible.
There are a number of things you can do to maximize the power of compound interest. One is to invest as much as you can afford. Another is to invest in high-quality investments that have a history of strong returns. Finally, it is important to stay invested for the long term.