Compound interest

Once upon a time in a far away forest, there was a little squirrel named Eddie. His parents told him all about the legends of the forest. Some trees are magical, they said. If you put an acorn in the hollow of a magical tree, the next day you'll find a second acorn and a third the following day. Each new day will bring a new acorn as long as you put one in at the start. So Eddie set off to find a magical tree. When he found one, he put an acorn in the hollow of the tree and settled in for the night. The next day, Eddie found a second acorn next to the one he had left the day before. "Hooray!" he thought. "My parents were right." But on the second day, Eddie got a big surprise. There weren't three acorns as he had expected, but four. He was in for an even bigger surprise on the third day. There were eight acorns. Eddie realized he had found a magical tree that was different from the one his parents had described. It didn't give just one new acorn per day. It doubled the number of acorns. Eddie decided to leave his acorns in the tree so they could keep multiplying. Eddie now had more acorns than any other squirrel in the entire forest. All thanks to his extraordinary discovery and patience. Wow. I wish I could find a tree like that. You know what? There's something a bit like that in real life. Really? Yes. It's called compound interest. It's different from acorns doubling every day. That would be impossible. But the principle is similar. When you save your money in a special account, the financial institution gives you a bonus each year. And the next year, the bonus is calculated on your money and the bonus from the previous year. Like how Eddie's tree made new acorns appear from the ones that were already there. Exactly. For example, if you save $100 and the financial institution gives you a $5 bonus the first year, the next year they'll calculate the bonus on $105, not just $100. It's slower, but over time your money can really grow, especially if you keep adding more. So, I could see my money multiply just like Eddie's acorns. with patience, regular saving, and the power of compound interest. Yes, it just takes a bit more time than in the movies.