Glossary
Compound Interest
Earning interest on your interest, so money snowballs
With compound interest, the interest you earn is added back to your principal, and then earns interest too. The longer the time, the more interest breeds interest, and assets grow exponentially.
For example, compounding at 7% a year roughly doubles your money every 10 years. This is why time is so powerful in investing. Debt compounds the same way, so high-interest debt is best paid off quickly.