Compound interest is the growth of the interest portion of an investment.
What is compound interest?
It’s typically known as the “return on your return” or the “growth on your return.” Compound interest grows exponentially, not in a linear fashion, which is why it has such great wealth-building potential. The earlier you start compounding the value of your investments, the higher the worth of your investments will become.
The interest rate and compounding period are extremely important variables when computing compound returns.