Compound interest is a key component to growing your investments. Basically, when interest is paid on the principal (or your investment account earns a positive return) that interest or return is then added to the principal and that new total earns even more interest next period (interest on interest). Then interest is paid on that new amount and repeated. So, it is the result of reinvesting the interest/gains instead of paying it out and letting it continue to grow over time. The sooner you start saving and allow the interest to grow (compound), the more time you’ll have to grow your balance.