Compounding interest

Compound Interest Explained

Compound interest refers to reinvesting the money you earned from your initial investment. The interest you earn each year is added to your original balance, which you then continue to earn interest on. Your balance grows at an increasing rate. The following example will show you exactly what kind of effect compound interest can have on your money: #infographics

If you took a penny on the first day of the month and doubled it every day for that month (all 30 days), how much would you end up at the end of the month?

Remember learning about exponential growth in algebra class? You have an equation to work out, and then you map a curved line on some graph paper. It starts out low and gradual, but when it finally takes off, it skyrockets! Exponential growth explains how compound interest works, and—if you use it right—this powerful formula can help you build a sweet nest egg for retirement.

Compound interest gives you the potential to build life-changing wealth. Find the best compound interest investments and accounts here.

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