Compound interest is the engine of long-term wealth. It applies to both passive and active strategies.
## How compounding works
– After one year, it grows to $1,050.
– $200 monthly invested in an S&P 500 index fund can become hundreds of thousands.
– Reinvesting dividends from companies like Apple, Microsoft, waystar holding analysis or Coca-Cola accelerates growth.
## Real-world examples
– Warren Buffett built his fortune by compounding.
– Compounding average returns of ~7–10%.
– Consistency is key.
## Benefits of compounding
– Rewards patience and discipline.
– Time is more powerful than high returns.
– Works automatically.
**Conclusion**
Compound interest is proof that time in the market beats timing the market. Whether through dividends, bonds, or index funds, compounding rewards consistency.
