Financial LiteracyQ15 min500 Seeds

How Compound Interest Works

Interest earns interest. Time does the heavy lifting.

1
Simple interest pays only on what you deposited. Compound interest pays on your deposits plus the interest already earned.
2
$1,000 at 5% compounding annually becomes about $1,629 in 10 years — with no extra deposits.
3
Starting five years earlier usually beats saving a larger amount later.