Time plays a critical role in compound interest, significantly influencing the growth potential of an investment. The key principle is that the longer your money is invested, the more time it has to grow through compounding. With compound interest, you earn interest not only on your original principal but also on the interest that has been added to your investment over time. The impact of compounding is relatively modest in the early years but becomes increasingly powerful over time. This is often referred to as the 'snowball effect'. As your investment grows, the amount of interest it generates grows as well, leading to faster and larger increases in the total value of your investment. The longer the period, the more interest accumulates on top of interest, leading to exponential growth.