Understanding compound interest can be fun. Consider what would happen if you could set aside $100 a month (just $25 a week) and it earned 10%. These days that sounds like great earnings. We're all excited if we can find 5% interest.
Anyway, $100 a month set aside earning 10%. Setting aside $1,200 a year for 20 years equals $24,000.
Enter compound interest. The saved $1,200 earns 10% which also earns 10%. Rate times time. The $24,000 actually earned and set aside to grow would do just that.
It would become $76,500. The gain in total would be $52,500.
If you add more time to the adventure of saving $100 a month, in 40 years you would have $637,000. Your invested earned $ would gain $589,000, over half a million.
Consider setting aside the most you can in an IRA, 401(k), 403(b), SEP, or Roth IRA. Compounding without having to pay taxes on interest income and you will reap a compound interest harvest!
'til later
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