Compound interest is really quite remarkable. Imagine you have $100 and you put it in a bank account that offers you an interest rate of 5% per year. This means that at the end of the year, the bank will give you $5, because 5% of $100 is $5. So now, you have $105 in your bank account. Now, if it was simple interest, the bank would keep giving you $5 every year, because 5% of your original $100 is always $5. Nice and easy. But that’s not how compound interest works. Compound interest is like a snowball effect. With compound interest, the bank gives you 5% not only on…