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Compound Growth
Growth on top of previous growth — your returns generate their own returns over time.
This is the most powerful force in long-term investing. When your investment gains 10% this year, next year's 10% is calculated on the higher amount. Over decades, the difference between simple and compound growth is enormous.
Example
Mariam invests £5,000. It grows 7% per year. After 10 years: £9,836. After 30 years: £38,061. The last 20 years add more than three times what the first 10 added, because each year's growth builds on a larger base.
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