If you are making any kind of investments and if your return is added to your investment, you are benefiting from compound interest. Compound interest is a way to increase your money at a faster rate.
How does compound interest work? It works like simple math. Imagine you have a bank deposit with 6% interest compounded yearly.
You’ve got 10,000 deposited. At the end of the year, you’ll still have your deposit of 10,000 plus interest of $600 (10,000 x 6%). That’s a new deposit balance of $10,600.