Step Four: Put the Magic of Compound Interest to Work for YOU.
How to Get 300% Return on Investment using Compound Interest.
By saving only $100 per year (that is only $2 per week) and put it into an account earning 10% per year and leave it alone for 25 years.
You have saved $2,500 in direct savings which has earned interest. The 10% Interest is not just 10% on the total savings but you earn 10% Interest per Year on the original deposit PLUS the Interest. That is compound interest.
If you only earned Interest on the annual deposit, you would have $2,750 after 25 years but with Compound Interest you will have $10,818.18. This is a profit of $8,318.18 or an average of $332.73 per year for the 25 years.
This is over 300% Return on YOUR Investment of $100 per Year.
This is how the Banks make money from the Credit Cards, Loans, Mortgages, Overdraft and Business Loans. Can you think of any good reason why you shouldn't use the Magic of Compound Interest for yourself?
Imagine what would happen if you saved $1,000 per year. Or what about $100 per week ($5,200 per year). Yes, it is roughly $10,818.18 times 10, 52 or any other multiple of $100. When you consider that every year you delay getting started is costing you in lost opportunity, and hard cash in later years, what is stopping you?
Imagine now what will happen when you generate other sources of income and can divert it into your investments. Imagine what will happen when you find investments which deliver 25% to 500% and more (yes they do exist)
how to pick good investments to protect your compound interest
. Do you now understand how you can become Wealthy on your income? Do you think that it is worth your time to restructure your personal finances so that you free up some cash for saving/investment purposes?
Using the Magic of Compound Interest, you can calculate the time it will take for your investment to double in size. It is called the Rule of 72. If you divide 72 by the percentage return the result is the number of years to doubling. Assuming a 10% return the answer would be 72 / 10 = 7.2 years. Assuming 50% return the answer would be 72 / 50 = 1.4 years.
The Rule of 115 allows you to calculate how long it will take to Triple your investment. Assuming a 10% return the number of years required to triple your investment would be 115 / 10 = 11.5 Years. Assuming a 50% return the time taken to triple your investment would be 115 / 50 = 2.3 Years.
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