Compound Interest

Compound interest means each period’s interest joins the principal and earns interest itself. Savings compound in your favour: a KiwiSaver balance earns returns on last year’s returns. Debt compounds against you: unpaid card interest becomes balance that itself attracts interest.

Time is the active ingredient. Money invested at 25 has decades of doubling ahead; the same amount at 50 has far fewer. This is why starting small early routinely beats starting big late.