Compound interest is a powerful concept that allows money to grow exponentially over time. Unlike simple interest, where the interest is only calculated on the initial principal amount, compound interest includes both the principal amount and the accumulated interest. This means that not only does your initial investment earn interest, but the interest earned also starts earning interest, leading to significant growth over time.

Understanding how compound interest works is important for making informed financial decisions. By taking advantage of compound interest, you can maximize your savings and investments. Whether it's a savings account, retirement fund, or investment portfolio, knowing how compound interest can work in your favor will help you reach your financial goals faster.

Key Lesson Concepts:

• Compound interest allows money to grow exponentially over time.
• It includes both the principal amount and the accumulated interest in the calculations.
• Understanding compound interest is crucial for making informed financial decisions and maximizing savings and investments.