Compound interest makes interest start earning interest itself. That is why saving over many years has such a big effect.

How it works

Interest added to the capital in the next period is itself subject to interest. Profit is therefore calculated not only on the amount you paid in but also on earlier profits.

A simple example

You deposit PLN 1000 at a constant 5% a year. After 10 years you have about PLN 1629, and after 20 years about PLN 2653. The second ten years gave more than the first.

Time matters more than the amount

Starting to save earlier often gives more than saving larger sums later, because the capital has longer to “work”.

Pitfalls

Real profit is reduced by costs, taxes and inflation. Always check how much is really left after deducting them.

The example is illustrative and is not a promise of profit.