How ‘compounding’ can make you a millionaire

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Your 2-minute guide to demystifying money and making you richer

Compounding can make you a millionaire

One of the most annoying aspects of personal finance is all the technical jargon that goes along with it. So today we’re going to unpack one of the most common concepts, and how it generates free money for you:

Compounding.

Put simply, compounding describes how the interest you earn on your savings earns more interest on top of itself, and that interest then earns more in turn, and this can go on forever and ever. 

• It’s one of the most important concepts in finance. And you need to know how it works.

In the long run, anyone who leaves their money alone in an account that pays any kind of return, for a long time, will end up rich. This doesn’t just apply to interest in a standard savings account. It applies to any kind of investment that grows over the years, especially if those investments are also paying dividends — which are the cash bonuses that investors receive simply by staying inves…