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What Is Compound Interest?

By Matthew Frankel, CFP – Updated Oct 23, 2024 at 9:57AM

Key Points

  • Compound interest allows reinvestment of earnings, increasing the principal and potential returns.
  • Long-term compounding dramatically boosts investment growth, e.g., $10,000 grows to $174,494 in 30 years at 10%.
  • More frequent compounding intervals can accelerate investment growth, enhancing overall returns.
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