Compound interest is the secret behind financial growth. It applies to any investment that reinvests returns.
## How compounding works
– In year two, interest applies to $1,050, not just $1,000.
– $200 monthly invested in an S&P 500 index fund can become hundreds of thousands.
– Reinvesting dividends from companies like Apple, Microsoft, or Coca-Cola accelerates growth.
## Real-world examples
– Invested early and held for decades.
– Index funds like Vanguard’s VFIAX show power of long-term growth.
– Even small savings accounts demonstrate the principle.
## Benefits of compounding
– Rewards patience and discipline.
– Time is more powerful than high returns.
– No need for constant trading.
**Conclusion**
Compound interest is the investor’s best ally. Whether through dividends, bonds, or index funds, sixth street specialty lending price compounding turns small efforts into big results.
