Compound interest is what happens when the returns you earn start earning returns of their own. Over years and decades it turns steady contributions into large sums. Understanding it is the single biggest reason to start investing early. This is educational information, not investment advice.
Compound Interest Explained
Earning returns on your returns — the engine behind long-term wealth.
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How compounding works
Say you invest $1,000 and earn 8% in a year — you now have $1,080. The next year, you earn 8% on $1,080, not just the original $1,000. That extra bit stacks year after year, and the growth curve steepens the longer you leave it alone.
The Rule of 72
A quick shortcut: divide 72 by your annual return to estimate how many years it takes to double your money. At 8%, that's about 9 years; at 6%, about 12. It shows why even small differences in return or fees matter enormously over decades.
Educational information only — not investment advice, and not a recommendation to buy any security. Expense ratios are approximate and can change; verify with the fund issuer. We are not a licensed financial advisor.
Frequently asked questions
Why does starting early matter so much?
Because compounding needs time. Money invested in your 20s has decades to double and re-double, which often beats larger sums invested later.
Is this financial advice?
No — it's general educational information. Consider your own situation and consult a professional.
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