The Power of Compound Interest Explained
Today we’ll discuss a topic that almost all of us have heard of “Compound Interest“. Over the past couple of weeks, I’ve had conversations with prospective clients and they mentioned finding a way to let “their money work for them”. I realized they meant “compound interest”. So today we’ll answer the questions of:
- How does it work? (4:30)
- Why is it so powerful? (8:50)
- How do I take advantage of it? (14:10)
Questions/Issues We’ll Address on this Episode:
How does it work?
The concept where every dollar of earnings becomes a candidate for earning interest [after the original investment] now, allowing you to earn “interest on your interest”.
Why is it so powerful?
So I’ll walk you through the math of a simple example. And you will quickly begin to see why there is such a “power” in this concept and that the most powerful component (“arguably”) is time and not really the interest rate you earn. This is corroborated by one of the most successful investors of all time: Sir John Templeton who said
“The best time to invest is when you have money. This is because history suggests it is not timing which matters, but time”. Sir John Templeton
How do I take advantage of it?
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