UK finance jargon - in plain English
Earning interest on your interest, not just your original money.
Compound interest means you earn interest on both your original deposit and on any interest already earned. Over time this creates a snowball effect where your money grows faster the longer you leave it.
You invest £5,000 at 6% per year and leave it untouched. After 10 years you'd have roughly £8,954 without adding a penny. Simple interest on the same amount would only reach £8,000. Time is doing the heavy lifting.
Numbers simplified for illustration. Actual rates and tax rules may change.
People underestimate how much time matters. Starting earlier often matters more than contributing slightly more later.
This is an illustrative estimate. It treats your rate as AER and compounds monthly to reach that annual figure. It does not account for tax on interest, platform or fund fees, inflation, or changes to interest rates over time. Returns shown are not guaranteed. The value of investments can fall as well as rise.
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