What Is Compound Interest?

Imagine you have a piggy bank that gives you a tiny gift every time you add a coin. First, the bank gives you a little extra money on what you put in. Then, it gives you extra money on the gifts too. This makes your pile grow faster and faster, like a snowball rolling down a hill, picking up more snow as it goes. You do not need to add more coins for the bank to keep giving you gifts. It is a snowball effect where your money makes more money, which then makes even more money. Over time, a small amount becomes a big amount without you doing any extra work. This is why people say time is your best friend in saving.