Glossary
Compound interest
Returns that themselves earn returns, so growth accelerates over time.
Simple interest pays you on your original amount. Compound interest pays you on your original amount plus every gain it has already made. Over one year the difference is trivial. Over thirty it is the difference between doubling your money and multiplying it by ten.
Compounding is why time in the market matters more than timing it, and why the boring advice to start early is genuinely the highest-leverage financial decision most people ever make. It is also why high-interest debt is so destructive - the same mechanism, running against you.
Where this matters
Index Fund Investing
Investing
Own the whole market at minimal cost and let decades do the work
- Capital
- Under $500
- First income
- Years
- Risk
- Ceiling
- Six figures
Dividend Investing
Investing
Build a portfolio that pays you cash without selling anything
- Capital
- $10k+
- First income
- Months
- Risk
- Ceiling
- Six figures