Compound interest is common knowledge for many of us, yet relatively few of us really understand the power of compound interest – or can use it well. Combine compound interest with time, and you can grow an insignificant investment into a hefty fortune. It’s little wonder that people call it the “8th Wonder of the World”!
Say for example we invest $100 at a rate-of-return of 20% p.a., and at the end of year we gain $20. We re-invest the whole sum – $120 – in the second year, and in just 10 years our investment will have grown six-fold!