How Does Compound Interest Work?

By Investment U Research Team “Compound interest is the eighth wonder of the world. He who understands it, earns it; he who doesn’t, pays it.” – Albert Einstein
This quote is one many investors know well. It succinctly sums up the power of compound interest and its potential. To understand it fully, you need to ask yourself: how does compound interest work?
While many people can explain the function of compounding, they’re lost when it comes to understanding exactly how wealth begets more wealth. Do you know the formula for compound interest? Are you familiar with the Rule of 72? Do you know how much your …read more