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Compound InterestThe snowball that keeps growing

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Money Sense0006

Compound Interest

The snowball that keeps growing

Interest that earns interest, so growth speeds up over time.

I · You07 / 53

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0006 · The Primer07 / 53

Put 1,000 rupees in a 10% account and leave it. In 40 years it becomes 45,259 rupees. You added nothing. Interest earned interest on itself. The curve stays flat for years, then turns steep. Most people quit during the flat part. The reward goes to those who waited.

  • The same force works in reverse: credit card debt at 36% interest doubles in about two years.
  • Search "compound interest calculator" online and enter your age. The graph tells the whole story.
SourceStandard financial mathematics
Quote misattribution: O'Toole, Hemingway Didn't Say That (2017)

Mechanism · GKL 0006

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