The concept of compound interest refers to the interest on both the initial sum, for example your initial investment amount, as well as the accumulated interest on that amount over time.
Unlike 'simple interest', which is calculated only on the initial amount, compound interest can make a sum of money grow faster over time.
Effectively, this "interest on interest" effect can significantly increase the value of savings or investments, making it a powerful tool for wealth accumulation.
Utilising compound interest is a particularly key step in developing your financial plan, particularly for those looking to save or invest early and consistently.
By using compound interest to your advantage, you are ultimately more likely to grow your wealth more effectively, achieve longer-term financial goals, and overall maximise your investment or saving returns.