Chances are, you’ve heard someone mention the term compound interest, at some point. But do you know exactly what it is and how it can benefit your investments? And just as important, do you know where to find the best compound interest investments?
Whether you are an active investor or an aspiring one, it’s crucial that you understand how compounding works. In my estimation, compound interest is critical to successful investing.
In this article, I’ll explain compound interest, how it works, and how you can use compounding to your advantage in your portfolio.
What Is Compound Interest?
Compound interest is earning interest on the interest you’ve already made.
Imagine a rolling snowball. A small snowball – representing your initial investment – gradually becomes larger as it rolls forward and adds more snow to what’s already stuck to the snowball. The more snow (interest) the snowball (your initial