What is compound interest? (Goldie explains)

Picture this: you plant one tree. Next year, that tree makes little baby trees. The year after, THOSE little trees make more trees. After 10 years, you've got a forest.

That's compound interest. But with money.

The simple idea

You've got €100 in the bank. The bank says: "We'll give you 5% a year."

• After 1 year: you have €105 (€100 + €5)
• After 2 years: you have €110.25 (the bank now gives you interest on €105, not just on €100)
• After 10 years: you have €163 — almost 2× as much
• After 30 years: you have €432 — more than 4× as much

And that's only with €100. Imagine what €2 a week becomes over 20 years…

The real secret

It isn't the first €100 that makes you rich.

It's the small amounts you start saving early — and the time that does the magic.

One example:

• Saving €2 a week from age 12 to age 18 = €1,000 more than without interest
• Saving €2 a week from age 18 to age 30 = about €1,700 more
• Saving €2 a week from age 12 to age 65 with growth = €16,000+ more

Starting early beats saving-a-lot-late.

Goldie's rule

Time is the secret ingredient.

Not how much you start with. Not how much you put in each month. How long you let it sit.

Try it yourself

Open our Compound Magic tool. Drag the years slider to 20 years. Look at what €2 a week becomes.

You'll be surprised. And you don't owe anyone anything for that knowledge.

What to do now?

1. Talk to your parents about a kids' savings account (nearly every bank has one)
2. Start with one small amount per week — can be €1
3. Let it sit. Don't even tell your friends.

In 10 years you'll say to yourself: "Smart of me back then."

— Goldie 🦉