One of the most basic economic concepts that affects personal financial decisions is compound interest, the idea that savings and investments grow based not only on contributions but is enhanced by interest earned on contributions and previous interest. Conversely, compound interest hurts borrowers, especially on high interest loans like credit cards. Get informed with this…
Category: compound interest
Making New Year’s resolutions? Keep them small and achievable
Here are strategies to consider: Don’t rely on motivation “New Year’s is when many people feel motivated to make changes, including making saving for retirement a priority. But motivation can dissipate quickly, as anyone who has joined a gym in January and stopped going in February knows.“ Instead find ways to “shrink your goals…
Investing $5,000 a year results in $1.2 million in 40 years so start now!
Wait… $5,000 x 40 $200,000. How did you get $1.2 million? The extra $1million is due to compounding.Writing for MarketWatch, Mitch Tuchman explains compound interest. “Shark Tank” star Kevin O’Leary has some simple advice for anyone who finds investing scary: Just do it. Now. “When you’re 21 years old, or 20 or 18 or 19…
Back to Basics: Compound Interest
Suppose you started with one penny on the first day of the month and then doubled it each day—to two cents, then four, then eight and so on.After 10 days, you’d have $5. After 20 days, you’d have $5,000 and, after 30 days, you’d have more than $5 million.Read the details in Jonathan Clements’ blog: https://humbledollar.com/2019/01/repeat-for-emphasis/…
Compound Interest is Critically Important
Sometimes we need a reminder about the power of compound interest, whether in the beginning years of saving or in the retirement withdrawal years. One specific example: “A retirement-saver who cashes out a 401(k) account with a balance of $5,000 at age 30 would lose more than $52,000 in compounded savings value by age 65,…