The compound interest effect describes how your savings grow over time when you earn interest not only on your original deposit, but also on the interest you’ve already earned. Over time, this creates an accelerating growth effect – especially when you save regularly and keep your money invested long-term.
Example:
If you save SEK 10,000 at 3 % annual interest, you earn SEK 300 the first year. The next year you earn interest on SEK 10,300 – on both your initial deposit and the interest from the previous year. The longer you keep your money in the account, the stronger the compound effect becomes.