How does compound interest grow savings faster than simple interest over time?

Compound interest accelerates the growth of savings because it calculates interest not only on the initial principal but also on the accumulated interest over previous periods. This creates a snowball effect where the investment grows at an increasing rate over time. In contrast, simple interest is calculated only on the original principal, so the returns remain constant. For example, with compound interest, an investment of 10,000 at 8% annually for 20 years will grow significantly more than with simple interest. The longer the investment period, the more noticeable the advantage of compounding. This makes compound interest a powerful tool for long-term wealth building, especially when combined with regular contributions and time. It rewards patience and consistency in saving or investing.