Compound interest
Interest earned on both your original money and on prior interest.
Why it matters
Compounding means your returns start earning their own returns. Over long periods this small effect grows very large — an $8,000 investment growing at 7% doubles to about $16,000 in ten years and again to $32,000 in another ten.
Learn deeper
PF101 — Compound growth
See also
Educational only — not financial, tax, or legal advice.