With compound interest, you’re not just earning interest on your principal, even your interest earns interest compounding your returns. It accelerates the growth of your investment over time. As Benjamin Franklin said, “ Money makes money. And the money that money makes, makes money.” Successful compounding lets you use less of your own money to reach your goals.
With it on your side, it is easier to build wealth. Here are a few facts you need to know about it.
1. COMPOUND INTEREST takes time
With compound interest, the power of time is everything. When you start investing or saving early, your money will have a longer time to grow. That’s why you should invest as soon as possible.
The earlier you start, the less of your own money you have to save or invest. This means the majority of your money will grow with compound interest. Financial Advisors are right when they say “ The best time to start investing is now”.
2. IT adds up faster than you think
The longer money compounds, the faster it grows. Money growing at 6% per year will double in about 12 years, but it will be worth four times as much in 24 years!
If you were to save N20,000 per month, earn 10% interest compounded daily, and do that continually for 20 years, you’d have put N4,800,000 into savings, but the account would be worth ₦15,476,618. And, even if you didn’t add a single dime, it would be worth over ₦42,064,048.00 in another 10 years.
3. Compound interest works for all
The principle works the same whether you invest ₦10,000 or ₦10 million. It is true that millionaires have more investment options, but even those with limited resources can use compound interest to build long-term wealth.
You don’t need to have a degree or years of experience in investing to gain from it. Almost any investment will earn compound interest if you leave your earnings in the account.
If you want to easily accumulate wealth and take advantage of the magic of compound interest, it’s important to start early and be consistent. it can be tempting to drop money into an interest-bearing account once and let it do its thing. But you’ll benefit a lot more if you often top up your investments. You can build long-term wealth the smart way with OVERWOOD today.
The Compound Effect is the principle of reaping huge rewards from a series of small, smart choices.