When you deposit a certain sum with a financial institution such as a bank, you generally earn interest on it. And if you choose to reinvest this interest that you earned along with the principal sum, what would happen?
You would essentially get to earn interest on both the principal sum as well as reinvested interest, right? This is what the concept of compound interest is all about; you basically get to earn interest on interest.
When you continue reinvesting the interest that you earn on your deposits over a long period of time, you can essentially accelerate your wealth creation ability.
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