A key concept that illustrates how money can grow over time.
Compound interest is the process by which interest is added to the principal amount of a loan or deposit so that, from that moment on, the interest that has been added also earns interest. This creates a snowball effect where wealth can grow exponentially rather than linearly. The formula for compound interest is A = P(1 + r/n)^(nt), where A is the amount of money accumulated after n years, including interest. P is the principal amount, r is the annual interest rate, n is the number of times that interest is compounded per year, and t is the number of years the money is invested or borrowed.
The most powerful force in the universe is compound interest. - Albert Einstein
