What is Compound Interest? | Animated Explainer by Knowlify (YC S25).

What is compound interest, and why is it so powerful? This short, hand-crafted animated explainer breaks it down simply — how your money can earn interest not just on what you put in, but on the interest it has already earned, so it grows on itself and snowballs over time. The earlier you start, the bigger the effect. ⏱️ CHAPTERS 0:00 It starts with a single coin 0:11 Your money grows over time 0:23 Why compounding snowballs 0:35 The earlier you start, the more it grows ❓ QUICK ANSWERS What is compound interest? Compound interest is interest you earn on both your original money and on the interest it has already earned. Over time your money grows on itself, which is why it can snowball into far more than you originally put in. How does compound interest work? You earn interest on your starting amount. That interest is added to your balance, so the next round of interest is calculated on a bigger total. Repeat this over years, and the growth speeds up. What's the difference between compound and simple interest? Simple interest is earned only on your original amount, so it grows in a straight line. Compound interest is earned on your original amount plus all the interest before it, so it grows faster and faster over time. Why does starting early matter so much? Because compounding builds on itself, the longer your money has to grow, the bigger the result. Starting even a few years earlier can mean dramatically more growth, since the earliest gains have the most time to compound. What is the compound interest formula? A common version is A = P(1 + r/n)^(nt) — where P is your starting amount, r is the interest rate, n is how often interest is added each year, and t is the number of years. In plain terms: more time and more frequent compounding mean more growth. Does compound interest work against you too? Yes. The same force that grows your savings can grow your debt. On things like credit cards, interest can compound on what you owe — which is why high-interest