Compound interest is the process of earning interest on both the original amount invested (the principal) and on any interest that has been added to the balance over time. Unlike simple interest, where you only earn interest on the principal, compound interest accelerates the growth of your investment by allowing the interest to build upon itself. The frequency of compounding—daily, monthly, quarterly, or annually—can significantly impact the final amount. Over time, even small amounts of compound interest can lead to substantial returns, making it a powerful concept in both saving and investing strategies.