Compound Interest

Interest calculated on both the initial principal and the accumulated interest from previous periods, creating exponential growth over time. Albert Einstein supposedly called it the "eighth wonder of the world" (though the attribution is likely apocryphal). A $10,000 investment growing at 10% annually becomes $25,937 after 10 years and $174,494 after 30 years -- the magic of compounding accelerates dramatically the longer money stays invested, which is why starting early matters so much.