By john 
Albert Einstein once called compound interest the “eighth wonder of the world,” and for good reason. Compound interest allows money to grow exponentially betpaus over time, turning small savings into significant wealth.
In essence, compound interest means earning returns not only on the original principal but also on the interest already earned. For example, if you invest $1,000 at 8% annual interest, you earn $80 the first year. The next year, you earn interest on $1,080, and so on. Over decades, this compounding effect becomes incredibly powerful.
Starting early is the key to maximizing benefits. Time amplifies compounding, meaning a 25-year-old who invests modestly can accumulate far more than someone who starts at 40. This principle applies to retirement funds, mutual funds, and even savings accounts.
However, compounding also works against borrowers. Credit card debt, for example, grows rapidly if unpaid, as interest accumulates on previous balances. Understanding both sides of compounding is essential to manage finances wisely.
The lesson is clear: time and consistency matter more than large sums. Regular investments, even in small amounts, can lead to financial independence over the long term.