Your investing questions, our clear answers.

Our response:

Compound interest is not an investment in and of itself but a way to grow the money you save by investing it to earn a return. You can make your money grow faster if you also invest the money you earn (your return) along with the money you started out with. This is called compounding.

As an example, if you began with $100 that’s compounded (grows) at a 3% annual interest rate and you contributed $50 every week, your money would grow to become ~$125,000 (37% of which was earned by compound interest) in 30 years. You can use our compound interest calculator to find out how an investment can grow over time with compound interest.

Visit GetSmarterAboutMoney.ca to learn more about investing and other financial topics. These resources may help to get you started:

• Growing your savings with compound interest
• Why people invest
• “How do I compound my investments?”