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Compound Interest
Compound Interest and how it works,
should be completely understood by any individual seeking to obtain true wealth.
It gives the average Joe who makes a modest income, hope for the future. Taking full-advantage of this powerful tool can put the factory worker on an even financial plane with the lawyer. Unfortunately, most people are unaware of the power of compound interest. If everyone understood that contributing $25 a week over a 40 year period can make them financially independent, there would be no need for social security. Perhaps it is the restlessness of youth. Looking ahead forty years in the future is asking a lot of someone in their twenties.
Do the math, putting $25 per week into a conservative investment, yielding 6% over a period of forty years, will return $213,000. Take the same scenario, this time increase the interest rate to a conservative 8%, and you have a return of $363,000. The numbers can overwhelm people when they first understand how it works. Keep in mind that $25 per week is only a starting point. It is likely that most individuals will increase this figure as they stay in the workforce longer. It is imperative that every investor have a complete understanding of how this amazing tool works. Especially investors 45 years of age or younger. Everyone should understand that compound interest is the light shining at the end of the tunnel. It can make anyone wealthy if they simply start at a young age.
Disclaimer: I am not a Registered Investment Advisor. All information on this website is my opinion and is put here for entertainment for my readers. I do not recemmend making financial decisions based upon my opinions. I will always give full disclosure if I own any stock that I am recommending. All information on this website is obtained freely from the Internet, Radio and Television. Any income generated from this website is created from the clearly displayed advertising on each page. |