how does compound interest work.
In: Economics
I have $10. I invest $10 in an investment that will get me $11 back every month, or a 1% return.
However, if I just keep that $10 in the same investment I will get way more than that 1% return over time if I take the profits from the investment and invest that as well.
The first month I invest $10, I get back $11 for a profit of $1
The second month I invest $11 and get back $12.1 for a profit of $1.1
The third month I invest $12.1 and get back 13.31 for a profit of $1.21
Fast forward 10 years, and that $10 has become $27.07.
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