1. The basics behind compound interest.
Most people view wealth as a matter of simple numbers. Start with 0 dollars, earn a 1000 every week, and you will have 4000 by the end of the month. But this is too simple, and money is never simple. Time is also a currency. If money has been intelligently invested it will grow as a snowball pushed down a hill. Slowly at first, but over time it will become larger and larger.
Say you have invested 100 dollars (Your principal) , and it earns 10% (Interest). At the end of every month (compounded 12 times per year), and you reinvest the 10% back into the original amount,.
1 month = 100 * 1.10 = 110.
2 months = 110 * 1.10 = 121
3 months = 121 * 1.10 = 133.1
And so on.
Every month you are earning slightly more. 10 dollars the first month, 11 dollars the second, 13.1 the third, and so on.