If compound interest is magical, why people are not investing in it?

Compound interest is not an investment. It's just a way some investment can grow.

If you make 4% on your investment this year, 1% the next, and 6% the next, then it means you have made a total o f 1.04 * 1.01 * 1.06 = 1.11 - so 11% interest.

Compound interest refers to this phenomenon. That is: if you leave your money invested in something that with a relatively small annual interest rate (3% to 10%) over a long period of time, your grow your capital considerably.

Why is it presented as "magical"? Because by investing a diversified portfolio (google index investing) in the stock markets, you can achieve 3% to 10% with limited risk, especially if your investment horizon is long (=you stay invested many years) - good years should make up for bad years over time.

/r/Entrepreneur Thread