The Power of Compound Interest

"man's greatest invention is compound interest" - Albert Einstein

Compound interest gives money the opportunity to grow all by itself. By using compound interest we "don't work for money but we let money work for us". You leave money in investments that give you good returns and it will grow all by itself. Just like a little plant, you leave it alone and come back after years only to find out that it just isn't a plant anymore but a large tree.

Let me give an example:
You have $10,000 right now but you don't know how to spend it. So, you placed the cash on an investment that earns 10% interest yearly. So, you will be receiving $1,000 a year and if you take that money and use it, you will be left with the same $10,000 you began with. Ok, lets say you decided to leave that $10,000 alone to grow. After 10 years that $10,000 would be $25,938! Even better, after 15 years it would be $41,772! So, if you took the yearly interest, you would benefit only $15,000 however if you leave it alone you benefit $41,722 after 15 years. That is more than DOUBLE the amount in which you would have received if you took the yearly interest.

This is the power of compound interest. It can make you earn a lot more than just saving the money!

Let's say you save $100 per month earning 5% yearly for 40 years. By the power of compound interest, it will grow to about $152,000 and if you double it to $200 it will simply be doubled to $304,000!

At 10% interest rate, saving $100 a month would earn $620,000! That is Quadruple the amount of the 5% interest rate! Ok, now can you see the power of compound interest?

And on top of all that, you are not taking high risks when you use the power of compound interest. You just need to know how to use compound interest at your advantage! Your key here is TIME and CAPITAL money. They more time you let the money grow and money you put, the larger the amount would be! Just make sure to look for investments that has above 10% interest rate in order put your savings into good use!

I will be adding more posts soon! To learn more, keep in touch here at Compound Savings interest!