How Compound Interest Can Grow Your Money

Compound interest is interest you earn on your original money and the interest you’ve already earned.

Over time, that “interest on interest” effect can turn steady, small deposits into a much bigger balance—especially if you start early and leave the money alone.

Instead of your money growing in a straight line, compound interest helps it grow on a curve.

Using KOHO Everything to Take Advantage of Compounding

To benefit from compound interest, you need two things:

1. Money going in regularly

2. An account that actually pays you decent interest

That’s where KOHO Everything can help:

• Grow your savings with 3.5% interest rates, one of the highest in Canada

• Earn 2% cash back on groceries, eating, drinking, and transportation and 0.5% on everything else

• Unlimited transactions & e-transfers

• Pay no foreign transaction fees

• No minimum balance required

The more consistently you add money, and the longer you leave it there, the more compound interest can work in your favour.

How Compound Interest Actually Works

Here’s the basic idea:

1. You deposit money into an account that pays interest.

2. At the end of the period (daily/monthly), the bank/fintech adds interest to your balance.

3. Next period, you earn interest on your new, bigger balance—which includes last period’s interest.

4. Repeat over months and years.

Because each cycle starts from a slightly higher amount, your money grows faster over time than it would with simple interest.

A Simple Example

Imagine you:

• Save $200 per month

• Earn a modest 5% annual interest, compounded monthly

• Stick with it for 10 years

After 10 years:

• You’ve put in $24,000 of your own money

• Your total balance is around $31,000

• Roughly $7,000 of that is interest working for you

You didn’t do anything fancy—just set up a monthly contribution and let time plus compounding do the heavy lifting.

How to Make Compound Interest Work Harder for You

To really benefit from compounding:

• Start as early as you can – time matters more than trying to “time the market” perfectly

• Automate contributions – treat saving like a bill you pay your future self

• Avoid constantly dipping into your savings—the longer it sits, the more compounding can build

Compound interest is basically your money’s way of working a second job in the background—as long as you give it time.