Einstein called compound interest the 8th wonder of the world. Let’s explore how this wonder can help you with your financial future. Of course, the earlier you start, the more time that this “wonder” has to work its magic.
What is compound interest?
Simply stated, you earn interest on savings and investments. That interest then earns interest. And on all of that interest, there is more interest earned. This wonderful cycle keeps compounding and using itself to get you more money! The higher your interest, the more money you will earn. As a result, your money will grow – exponentially!
Let’s break this down with some examples
Compound Interest Calculators
There are quite a few calculators online.
For instance, you can play around with this one:
Or try this one:
Or perhaps this one:
Okay. One more. Since you asked:
Really, you could do an internet search and find one that you like and is user-friendly.
Biggest Advantage
Time! As you can see from the above charts, the earlier you start, the more money you will have come retirement time. Time is your biggest advantage. If you are starting later, it’s okay. Just start! You may find you have to put more money in to reach your goals. Or receive a higher rate rate of return. Or a combination of the two. But whatever you have will be better than never starting at all.
