How Compound Interest Grows Wealth
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Video Transcript
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Compound interest is money making money on top of money. When you earn interest
on your initial investment, that interest gets added to your total. Then you earn interest
on that new, larger amount. This cycle repeats, creating exponential growth over time.
A simple example: invest one hundred dollars at ten percent annual interest. After year one,
you have one hundred ten dollars. Year two, you earn interest on the full one
hundred ten, not just the original hundred. Over decades, this snowball effect
can turn modest savings into substantial wealth. Time is your biggest advantage.
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