The right advice is to start saving regularly and invest wisely. Longer, the investment horizon higher are the returns. In the long term, this technique will benefit the investor. This powerful tool (compound interest) can be used by investors to plan their financial goals. When the principal includes the accumulated interest of the previous periods and interest is calculated on this then they say its compound interest. Reinvestment of earnings at the same compound interest rate of return would help in continually growing the principal amount year-on-year. The value of the investment keeps growing at a geometric rate (always increasing) rather than at an arithmetic rate (straight-line).
It is because the interest of your invested money is also earning interest. Reinvestment of earnings at the same rate of return to grow the principal amount every year is compounding.
