
21/05/2025
Understanding compound interest is fundamental to successful investing. Simply put, compound interest means you earn interest on both your original investment and the accumulated interest from previous periods. Over time, this effect can lead to exponential growth in your wealth. Starting to invest early, even with small amounts, can make a massive difference thanks to the magic of compounding. For example, investing $200 monthly at an average return of 7% annually can grow into a substantial nest egg over decades. Long-term investing strategies, such as contributing regularly to retirement accounts or diversified portfolios, harness compound interest to help you achieve financial independence. The key is consistency, patience, and avoiding the temptation to withdraw funds prematurely. The earlier you start, the more time your money has to work for you.