Interest earned or paid on interest.

If you invest $10.00 and earn 5% interest annually, you will receive $0.50 interest ($10.50). Now, let's say you reinvest that interest, so it earns interest too. You now earn interest on $10.50 instead of only on the original $10 investment.

Reinvesting your dividends leads to an ever-growing interest payment every year (hint: That's how the magic happens 👆). Over time, you just may have a big ol' nest egg to enjoy all on your own or share with that someone special.

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