Compound Interest Is the Market's Most Powerful Force: Here's How It Actually Works

Key Points Compound interest is the mathematical process of an investment growing and building upon itself. The magic of compound returns for stocks is powerful because dividends get reinvested, making a small initial investment grow much larger over time. The S&P 500 has earned 10% average annual total returns for the past 98 years, and 15% for the past 16 years. These 10 stocks could mint the next wave of millionaires › Why do people invest? It's not just to get a tax break from contributions to a 401(k). The ultimate reason is that we want our money to grow for the future. The way that money grows, and the biggest reason to invest, is the power of compound interest.