What is compound interest?
Starting young lets the students take advantage of the magic of “compound interest.” Compound interest is the interest you earn on interest.
This can be illustrated by using basic math: if you have $100 and it earns 5% interest each year, you’ll have $105 at the end of the first year.
At the end of the second year, you’ll have $110.25. Not only did you earn $5 on the initial $100 deposit, you also earned $0.25 on the $5 in interest. While 25 cents may not sound like much at first, it adds up over time. Even if you never add another dime to that account, in 10 years you’ll have more than $162 thanks to the power of compound interest, and in 25 years you’ll have almost $340.
investor.gov
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https://www.investor.gov/financial-tools-calculators/calculators/compound-interest-calculator
- Focus on the long-term investments
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