Rinkins Report: Nickel and Dime Your Way to Wealth with Compound Interest

Christine

Economists describe compound interest as interest earned on the starting amount plus the built-up interest, over a period of time. Khan Academy produced an easily-to-understand video explaining the concept.

Albert Einstein called it “the most powerful force in the world.”Compound interest can work for or against you.

Case in point, let’s says you ignore a $1,000 credit card bill for four months. Compound interest causes that that payment to balloon to $1893.18, assuming you’re charged 17.3 percent interest.

Use compound interest to your advantage by investing in assets (stocks, bonds, real estate, etc.) that grow in value.

For example, if you put a $1,000 one-time investment in an index fund. After five years, you would earn $1,402.55, assuming you earn 7 percent interest.

Let take it a step further. We keep the $1,000 in the index fund. Plus, add $25 every pay period. After five years, you would earn $ 9,401.83, earning the same 7 percent interest.

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You deserve a comfortable future. Invest now and enjoy the benefits of compound interest.

MoneyChimp.com has an online calculator that allows you to see how much compound interest you can earn over a period of time.

Zach Rinkins is an Associated Press award-winning journalist and sought after speaker. You can connect with Zach on Facebook and Twitter at @ZachRinkins or ++www.ZachRinkins.com++

http://financialjuneteenth.com/rinkins-report-nickel-dime-way-wealth-compound-interest/

Comments (1)
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Bryanda
Bryanda

Wealth accumulation is a very interesting concept; does this account for inflation also? What would be the true value over time?


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