Here is how time can work for you:
Compounding works like this . . .
The interest earned on your investments is reinvested or left on deposit. At the next calculation, interest is earned on the original principal plus the reinvested interest. Earning interest on accumulated interest over time generates more and more money.
Compounding also applies to dividends and capital gains on investments when they are reinvested. The following illustration and questions give you a firsthand opportunity to calculate the impact of time on the value of your investment accumulation.