What is compound interest?
With compound interest, the amount earned during one period can become part of the balance used to calculate future interest.
Over time, this can produce accelerating growth because the balance itself can continue to increase.
Why time matters
The length of time money remains invested or saved can have a major effect on compound growth.
Two people contributing similar amounts can end up with significantly different balances if one begins earlier and allows the money more time to compound.
Monthly contributions can increase growth
Regular contributions add additional money to the balance and can increase the amount that compounds over time.
The effect depends on the contribution amount, frequency, interest or return assumption, compounding frequency, and investment period.