Finance & Moneybeginner
Compound Interest
Definition
Interest that is earned not only on your original money but also on the interest already added, so it grows faster and faster over time.
Why it matters
Compound interest is the engine behind growing savings and investments, and understanding it helps you build wealth and avoid spiralling debt.
Example
Save £1,000 at 5 percent and you earn £50 the first year, then the next year you earn interest on £1,050, not just £1,000.
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