Compound interest is interest earned in a savings account or on certain types of investments, such as certificates of deposit (CDs) or fixed annuities. You can earn interest on the principal and the interest added over time. Compound Returns Compound returns apply to dividends, capital gains, and other investment gains. This concept is commonly used when discussing stocks, mutual funds, and other investment vehicles. Impact of Compound Interest Compound interest can work

Depending on which side of the transaction you are on, interest is either the cost of borrowing money or the reward for saving or investing it. If you are a borrower, interest is a percentage of the loan amount you will owe the lender over a year, known as the interest rate. Conversely, if you are a saver or investor, you receive an annual percentage yield (APY). For instance, if you borrow money, the lender charges you interest on top of the amount borrowed. In contrast, i