**Compound interest **is interest that is added to the initial investment, or 'principal' of a deposit, so that the **investment plus the added interest** also **earns interest** from then on.

For example, you will earn interest as follows -

**Month 1: **earn Interest on your Initial Investment

**Month 2: **earn Interest on your **Initial Investment **plus the Interest from** Month 1**

**Month 3: **earn Interest on Initial Investment, plus **all** the Interest earned from **M****onth 1 and Month 2**

... and so this continues.

For numerical examples of **compound interest**, click here.

You can also find out more about Compounding Interest from the following external link - http://www.investopedia.com/terms/c/compoundinterest.asp