![\"Historical](\"https:\/\/www.newsbeep.com\/au\/wp-content\/uploads\/2025\/08\/albert-einstein-circa-1947_BLU_A39216433.jpg\")
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GOBankingRates’ editorial team is committed to bringing you unbiased reviews and information. We use data-driven methodologies to evaluate financial products and services – our reviews and ratings are not influenced by advertisers. You can read more about our editorial guidelines<\/a> and our products and services review methodology<\/a>.<\/p>\n 20 Years Trusted by As humans go, Albert Einstein was pretty smart. Using nothing but \u201cthought experiments,\u201d he figured out the fabric of the universe (special and general relativity and spacetime), the whole energy is matter and vice versa thing (E = mc2), the existence of gravitational waves, and a dozen other mind-blowing facts<\/a>.<\/p>\n There was one thing he couldn\u2019t crack, however: compound interest. Einstein supposedly once quipped<\/a>, \u201cThe most powerful force in the universe is compound interest. He who understands it, earns it, he who doesn\u2019t, pays it.\u201d Probably the most powerful thing about it is that anyone \u2014 including non-geniuses \u2014 can benefit from it. And in a big way. It\u2019s basic math, which might explain Einstein\u2019s trouble with it \u2014 it\u2019s too simple.<\/p>\n<\/p>\n How Compound Interest Works<\/p>\n Compound interest is merely the interest earned on interest. That grows your money exponentially. For instance, if you invest $1,000 and it earns 5% a year, in a year, you have $1,050. But in the second year, the $1,050 earns 5% interest. So, by the end of that year, you have $1,102.50. Not super impressive.<\/p>\n However, leave it for 10 years and you have $1620. In 25 years, it\u2019ll be $3,400. And if the interest compounds more often \u2014 every month, for example \u2014 it grows even faster. For doing nothing.<\/p>\n If you don\u2019t think that\u2019s powerful, speak to Warren Buffet, often called the greatest investor of all time. He listed compound interest as one of the reasons he\u2019s one of the world\u2019s richest people and likened it to a snowball rolling down a long hill<\/a>, getting larger and larger all on its own.<\/p>\n Finance guru David Ramsey said<\/a>, \u201cCompound interest is proof you can get rich slowly.\u201d\u00a0And he\u2019s right. It will take time, which is why it\u2019s so important to begin investing young and playing the long game, as Buffett himself has advised. He bought his first stock at 11 years old<\/a>, and now famously holds onto his investments for years (he sold that first stock when it temporarily dipped and learned his lesson).<\/p>\n<\/p>\n![\"\"](\"https:\/\/cdn.gobankingrates.com\/wp-content\/uploads\/2023\/11\/icon-20.svg?webp=1&quality=75\"){kind=icon}
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