Interest can be your best friend or your worst enemy. When it comes to earning interest we all love to get as much as we can, but when it comes to having to pay interest, we all hate that someone is taking our money.

For most people, interest is a common part of their interactions with banks. We either pay interest, like with a credit card or a mortgage, or we earn interest with a savings account. When we first take out a mortgage, we see how painful interest can be, when so little of our monthly payments is going towards our principal balance. While at the same time we can see our investments grow over time, as we get more and more money from interest on our other accounts.

Compound interest can be our best ally when it comes to investments. As principal is added to our investment, that interest now starts accumulating interest. This causes investments to grow exponentially, and is one of the best to start saving for retirement as early as possible.