Compound interest is a powerful tool in wealth building that allows investors to earn interest on both their initial investment and on the interest that has been added to the investment over time. By reinvesting the interest earned, the overall amount of the investment grows exponentially. For example, if you invest $1,000 in an account with an annual interest rate of 5%, at the end of the first year, you would have $1,050. In the second year, with the same interest rate, you would earn interest not only on your initial investment but also on the $50 interest that was added in the first year. This compounding effect continues to grow over time, leading to significant wealth accumulation. The key to maximizing the power of compound interest is to start investing early and consistently. The longer the money has to compound, the greater the impact it will have on your overall wealth. By making regular contributions to your investment account and allowing the power of compound interest to work its magic, you can set yourself up for long-term financial success. Remember, time is your best ally when it comes to building wealth through compound interest.