The interest on a loan is added to the principal so that the interest also earns interest. This addition of interest to the principal is called compounding. Over time the compounding effect accelerates. Increasing the interest rate, term, or principal amount maximizes the effect. For example, a $1,000 investment, earning 20% annual interest, over ten years, accumulates a total of $7,385.01.
Leadership Advocate and Co-Founder of the Goldzone Group. I help leaders to master the new rules of leadership for the new economy. Over the past 30 years, I have visited over 500 cities in 54 countries to explore, learn from, and help many of the world’s leading companies, leaders, and luminaries in the fields of science, technology, health, finance, entrepreneurship, and leadership.