The Power of Compound Interest (Especially if you want to be rich!)

If you’re young and want to be rich, the power of compound interest will make it happen.

As you can tell by my branding, I’m very optimistic about growth, and taking advantage of compound interest will help you grow your wealth.

Compound interest is just one of the elements of investing which just make becoming an investor such a no brainer decision, especially the younger you are.

You see, when it comes to investing, time is your friend. In fact, time trumps the amount of money you can initially start investing with.

The data doesn’t lie, and over time compounding interest will win over the amount of money you actually invest.

In short, your interest is applied to your initial investment amount, and the interest you have already earned.

For example;

Melissa, at the age of 25, decides to allocate $1,000 per month for investing and continues to do so until her 35th birthday...then she stops. She will have contributed $120,000 over 10 years.

She leaves it in an investment account with a 7% interest rate, until she retires at 65 (retirement age in Singapore is 62 for now, but it could rise in the future).

The power of compound interest turns Melissa’s $120,000 to $1,444,969 (that’s almost 1.5 Million Dollars!)

David is unsure about investing, delaying it until he felt he was ready...and only starts saving at the age of 35.

He turns 35 and puts away $1,000 per month until his 45th birthday. He left the balance in his investment account, where it continued to grow (compound) at a rate of 7% until age 65, just the same as Melissa.

At the age of 65, David’s $120,000 investment grows to $734,549. Not bad but close to half of what Melissa’s same investment is worth.

Jo delayed her investing journey until age 45. Similarly, she invested $1,000 per month for 10 years up to 55 years old.

This money was also left to compound at a 7% rate until her 65th birthday.

Again, they have all invested the same amount over 10 years…$120,000.

Jo is left with just $373,407. Better than $120,000 but over a million dollars short of what Melissa has at the age of 65.

If this has surprised you or even given you that extra motivation to get your investment strategy on track, no matter what stage of life you are at, message me or book a session with this link and I will help you grow.