Glossary

Compound interest is the interest earned not only on the initial principal amount of an investment but also on any accumulated interest from previous periods. 🌱

It's a powerful concept that can greatly increase the growth of your investments or savings over time, as interest is earned on both the initial amount and the accumulating interest.

For example, if you invest $1,000 at an annual interest rate of 5% compounded annually, after one year, you'd have $1,050. In the second year, you'd earn 5% interest on $1,050, not just the initial $1,000.

Fun fact: Albert Einstein is rumored to have called compound interest "the most powerful force in the universe" and "the eighth wonder of the world". 🌍 Whether he actually said this or not, compound interest is a key concept that can significantly impact the long-term growth of your investments.