The Power of Compound Interest

Compound interest means earning returns on your returns — not just on your original investment. If you invest $200/month at a 10% annual return (the S&P 500 historic average), after 20 years you'd have invested $48,000 but your total would exceed $150,000. The interest earned is reinvested, generating its own interest. Einstein reportedly called it the 'eighth wonder of the world'. Starting 10 years earlier can double your final portfolio, even with the same monthly contribution.