Compound interest refers to the process of earning interest on both the initial principal and the interest that has already been added to the account. This 'interest on interest' effect accelerates the growth of your savings over time, making compound interest a powerful tool for building wealth.

The longer your money is invested or saved with compound interest, the more dramatic the growth. For example, an investment earning compound interest for 30 years will grow much more than one earning interest for just 10 years. This is why starting to invest or save early can have such a significant impact on future wealth.