Did you know that Albert Einstein called the principle of compounding the 'eighth wonder of the world'?
And it truly is, because it can do wonders for your finances.
So what is the principle of compounding?
Compound interest is the interest calculated on the initial principal, which also includes all of the accumulated interest from previous periods.
So, the added benefit provided by compound interest over simple interest is the ‘interest on interest’.
The principle of compounding can help us earn much greater returns on our invested amount because of this.