The Power of Compound Interest Part II

Compound interest is the 8th wonder of the world, once understood and put into practice, it’ll be difficult to not think about each activity in your daily life without the effects of compounding, especially when it comes to finances. Simply put, it's interest on interest meaning that over time, the interest earned on an initial investment grows exponentially as the interest itself is reinvested. The effect of compounding is often underestimated, but it can make a huge difference in the long-term growth of savings or investment accounts. There’s the classic example of doubling a penny every day for a month, resulting in $5.36 million.