1. The magic ingredient in compounding is time Compounding helps investors build wealth by generating returns on investments over time. These returns then continue to compound and help grow assets. Compounding is sometimes referred to as "earning interest on interest." Many of us know that compounding works, but we can't really understand it on a huge scale. Housel delivers some perspective by taking a look at Warren Buffett. Buffett is well known as one of the wealthiest investors of all time, but it's not all because of his skill as an investor. Buffett started investing when he was a kid, at the young age of 10, so his money has had decades to compound. Most of us can't go back in time and fill up investment accounts we never had, but we can start investing now. The longer your money stays in the market, the more it will grow.