Compound Interest: The 8th Wonder of the World

Albert Einstein famously called compound interest the "eighth wonder of the world." He said, “He who understands it, earns it. He who doesn’t, pays it.”

Compound Interest: The 8th Wonder of the World

Albert Einstein famously called compound interest the "eighth wonder of the world." He said, “He who understands it, earns it. He who doesn’t, pays it.” And honestly? He was spot on.

If there’s one financial principle that has the power to completely transform your future—it’s this. Whether you're building wealth for retirement, saving for a home, or setting up future security for your family, compound interest is your best friend.

What Is Compound Interest, Really?

Compound interest is interest on your interest. Unlike simple interest (which is calculated only on the original amount you invest), compound interest grows exponentially because it builds on itself.

The earlier you start, the more time your money has to grow. It's not about how much you put in—it's about how long you let it grow.

Let's Break It Down with a Scenario:

We’ll look at two savers: Ruby, who starts at age 25, and Sophie, who waits until age 35. Both aim to retire at age 65 with £1 million.

• Ruby invests £300 per month for 40 years.

• Sophie invests £600 per month for 30 years.

Assuming an average 7% annual return, compounded monthly:

• Ruby’s total contribution: £144,000 Final pot: ~£1 million

• Sophie’s total contribution: £216,000 Final pot: ~£730,000

Even though Sophie invests more money overall, she ends up with less—simply because she started 10 years later.

That’s the magic of time + compound interest.

The 7-Year Rule

Here’s a handy rule: at a 10% interest rate, your money doubles roughly every 7 years.

• £1,000 at 25 becomes £2,000 at 32

• Then £4,000 at 39

• £8,000 at 46

• £16,000 at 53

• £32,000 at 60

• £64,000 by 67

That’s from a single £1,000 investment! Imagine what happens when you're regularly investing over time.

But What If You Can’t Afford £300 a Month?

Start small. Even £25/month is powerful with time on your side. The key is to start. You can always increase your contributions later.

Compound interest is one of the few financial tools that rewards you for being patient—not perfect.

Why This Matters for Women

Women are statistically more likely to take career breaks, reduce hours, or earn less over their lifetimes due to caregiving. That makes it even more crucial to harness compound interest early.

Building your financial future isn’t about huge amounts of money—it’s about consistency, time, and knowing how to make your money work harder for you.

Your Takeaway

If you're reading this and you're under 30—amazing. You have time on your side. Start now, even if it’s small.If you're reading this and you're over 30—don’t panic. Start today. Every month counts. The best time to plant a tree was 20 years ago. The second-best time? Right now.

Want to Learn More?

We cover this (and how to set up your own long-term savings plan) in our courses and resources. Whether you're a beginner or getting back on track, we've got you.