AIBU to think compound interest is surprisingly powerful over time?

[shocked2026]

To think that compound interest is WILD? I know it works negatively with mortgages etc but also over time with tiny amounts of money it can grow exponentially. I realise that many people probably know this already but I didn’t realise how much of an effect it can have!

It was, at primary, I grad the best primary school teacher. We did maths, music, reading, English, games, art and religion. I have such a big brain thanks to him.

Had obviously, bloody mobile

Correct, there is no guarantee of a positive return.

YABU to think there is anything surprising about it.

Yup. I started a couple of modest personal pensions in my mid 30's, only paid in for a few years but – nearly 30 years later – they are earning more than me.

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Parents can teach stuff too, financial skills don’t have to be only taught by schools!

It’s not compound interest if you’re talking about investment returns, which it sounds like you are. Compound interest is interest on interest - global tracker funds invest in shares, there’s no interest involved. You can’t guarantee 5% return every year for 30 years, losses are available too. See the financial crisis, or Covid. I’m not saying investing is a bad thing if you have a 30 year horizon, but it’s not compound interest.

Because they can't afford to!! Money is taken up on mortgage and bills.

@shocked2026 i'm shocked that you're shocked

But you may have just explained to me why a couple of people in my life don't seem to give a shit about saving

Clearly, I'm guilty of thinking that people know this stuff

and one of those people should've paid off their mortgage years ago I never understood why they didn't but you may have just explained it to me... now he's talking about being unable to retire and I mystified

But I'm also mystified by the amount of money he spends he's actually said to me maybe 30 years ago that it wasn't worth saving!

Compound interest has been taught in Secondary Maths since at least the 1980s (as that's when I did it).

And they do teach finance.

Macrame would have been useful for making a few bob, though.

I’m so glad that when I started working at 18, the company that I worked for paid into a pension for me. At that age I would never have had the foresight to do so

I didn’t do GCSE as like many others I didn’t grow up in England 🤷🏻‍♀️

I didn’t do GCSE ad I grew up in Scotland.

Compound interest is more than basic percentages though.

This is also why student loans are so onerous to pay off.

Are you a pensions person, OP? Looks like it

We were taught many things like this in home economics. I don't think it's revelatory that if you have £200 PCM to save and put it somewhere with decent interest you're gonna have a pretty decent nest egg after 30 years of saving and letting it accrue interest but you'll do even better if you put it into a pension fund I'd reckon

Maybe not all teenagers. My 16 yo was very interested and has been saving his spare change/cash gifts for over a year. It was taught exactly as compound interest, just like the depreciation value of new cars.

It is taught in the Scottish curriculum. Was taught in Standard Grades and currently taught in National 4, calculating interest on savings and loans.

“edwinbear · Today 22:34
It’s not compound interest if you’re talking about investment returns, which it sounds like you are. Compound interest is interest on interest - global tracker funds invest in shares, there’s no interest involved. You can’t guarantee 5% return every year for 30 years, losses are available too. See the financial crisis, or Covid. I’m not saying investing is a bad thing if you have a 30 year horizon, but it’s not compound interest.”

This. You don’t earn compound interest on investments. Compound interest is quite rare. Where interest is earned it’s usually simple interest.

It’s not compound ‘interest’ but if your investment is in accumulation funds then you get compounding.

Yes but if you’re investing for the longterm you reinvest that interest so it has the same effect.
you can’t take the interest, profit on s&s etc out of a pension till you retire so it’s all reinvested and hence compounding occurs.

It is.

I agree that obviously compound interest isn't earned on investments, however I disagree that compound interest is rare.

On savings accounts most interest would be compound, I would have thought. Most people don't take the annual or monthly interest out of a savings account and leave the capital there, they leave the interest in the account so the following year/month the interest is paid on capital+previous interest i.e. compound interest.