How Compound Interest Works
Compound interest is the interest on a loan or deposit calculated based on both the initial principal and the accumulated interest from previous periods. Over long periods, this creates exponential growth, as you earn "interest on interest".
The Impact of Regular Contributions
While compound interest is powerful on its own, adding regular contributions significantly accelerates your wealth building. By consistently investing a set amount weekly or monthly, you increase the principal amount on which interest is calculated, further amplifying the compounding effect.