Compound Interest
Definition
Interest that's calculated not just on your original money, but on the interest you've already earned. It's 'interest on interest' — like a snowball rolling downhill, getting bigger as it goes. After a few years, compound interest can turn a modest investment into something substantial.
Why It Matters
This is the closest thing to free money in finance. Starting early matters enormously because time is your biggest advantage. Even small amounts compound into significant wealth if you give them decades to grow.
Example
Invest $10,000 at 7% annual return: After 10 years you'd have ~$19,672. After 20 years: ~$38,697. After 30 years: ~$76,123. That extra $66,123 is pure compound interest doing the work.