Simply put, compound interest is interest on interest.
It’s important to understand how this works, whether you have lots of money or just a few dollars. It’s better if you are benefitting from compound interest because your savings increase with interest on the interest, which is essentially free money.
If you buy items on credit, knowing how compound interest can increase the cost of the item is important too. Sometimes a really good deal isn’t such a good deal if you have to pay interest to make the purchase.
That’s why it is important to sign up for the Canada learning Bond as soon as possible. The sooner you have money in your RESP, the more opportunity there is for compound interest to grow your funds. This will result in more money for your post-secondary education.
There are lots of You Tube videos that explain how compound interest works. You can start with this one from BMO Wealth. There are lots of other on-line resources to help you understand compound interest.
Even if you don’t apply for the Canada Learning Bond until later, be sure to apply to receive any money that you are entitled to for post-secondary education.
