Compound interest (compounding) is a powerful force, and one of the most versatile mental models. Compounding “is the addition of interest to the principal sum of a loan or deposit”. I like the simpler framing “growth on your previous growth”.

Compounding is versatile. It’s a mathematical concept that is the foundation for modern finance, but can be applied to almost anything - knowledge, capability, ideas, relationships, product growth, and more.

Some sub-concepts about compounding, that can also be applied outside mathematics:

I like this quote from Naval Ravikant

Play iterated games. All the returns in life, whether in wealth, relationships, or knowledge, come from compound interest.