Eli5: Compound interest?

493 views

I don’t understand it like at all. I’ve heard it’s beneficial moneywise but I don’t understand why or how to invest in compounds??
Reading online it seems that it’s beneficial however that’s all I seem to understand so if it is something to look into and invest in I’d like to Understand it better 🙂

In: 0

7 Answers

Anonymous 0 Comments

The longer you invest the faster your investment grows.

10% interest on $100 doesn’t give you +$10 per year because compound interest keeps applying.

Year 1 turns $100 to $110 (+10)

Year 2 turns $110 to $121 (+11)

Year 3 turns $121 to $133.1 (+12.1)

Even though you haven’t put any more money in than the initial $100

You are viewing 1 out of 7 answers, click here to view all answers.