Compound interest is often called the eighth wonder of the world. Unlike simple interest which earns returns only on your original amount, compound interest earns returns on your accumulated gains — creating exponential growth over time. The longer your money is invested, the more dramatic the effect.

Adding regular contributions amplifies this dramatically. Investing $500 per month at 7% over 30 years grows to approximately $585,000 — but you only contributed $180,000. The remaining $405,000 is compound growth. This is why consistent investing matters more than trying to time the market.

For Australian-specific investment strategies, consider your super fund (taxed at just 15% on returns), high-interest savings accounts, ETFs, or index funds. Use our Super Calculator to project your retirement balance.