Compound Interest: Let Your Money Work for You

Published: October 20, 2025

Albert Einstein reportedly called compound interest the eighth wonder of the world. Why? Because it can turn small amounts into a fortune — given enough time and consistency.

🔁 What Is Compound Interest?

It means earning “interest on interest.” Over time, this creates a snowball effect that accelerates growth — your money starts earning more money for you.

Simple vs. Compound Example

Simple interest: $10,000 at 10% → $13,000 after 3 years.
Compound interest: $10,000 → $11,000 → $12,100 → $13,310 after 3 years.

📘 A Real Story: Ronald Read — the Janitor Millionaire

Ronald Read lived a modest life, working as a janitor and gas station attendant. But he consistently invested small sums into solid dividend-paying companies and reinvested his earnings. Over decades, compound interest turned him into a millionaire.

Lesson: start early, stay patient, and let time work its magic.

⏳ Two Keys to Success: Time and Consistency

1. Time — the earlier you start, the more your money grows.
2. Consistency — regular investing, even in small amounts, makes a huge difference.

🧮 Example: Adam vs. Barbara

Both invest $500 per month at an 8% average annual return.

• Adam starts at 25 and stops after 10 years (total invested $60,000). He leaves it untouched until 65.
• Barbara starts at 35 and invests for 30 years ($180,000 total).

Result at 65: Adam ≈ $930,000, Barbara ≈ $740,000 — Adam wins by starting earlier.

👉 Try the Compound Interest Calculator inside the Profiro app and see how your own numbers grow. Open in the App Store