compound interest

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Who Cares About Compound Interest?

Turn Little Money Into Big Money

Anyone interested in making their money work for them should be interested in compound interest. Albert Einstein called compound interest “the greatest mathematical discovery of all time, those who understand it, earn it, those who don’t pay it.” In other words, you snooze, you lose.

You do not have to be a genius like Einstein to understand the basics of compound interest; it is simply your interest earning interest. If you save money at regular intervals, reinvest your earnings and keep your money invested you will benefit greatly from compound interest. Compound growth turns a little money into big money over time.

Growth Is Key, Key Is Time

You invest money with the hope that your money will grow; why else would you invest, right? When you are young, time is on your side for so many things; your healthier, you have greater resistance and you have lots of time for compounding to work in your favor. If you start investing early in your career, your money will have a longer period of time to grow producing greater results. Even if you can only start investing with a small amount, do it, you will be so glad you did.

Do not be shy about using financial or math calculators to measure your progress. Just remember that these calculators are the mechanics, not the action. You need to make the effort; you need to make it happen. If you rely too heavily on the mechanics and dismiss the importance of regular investments, reinvestments and not touching your investment money, you miss the point of making compound interest work for you.

Different Calculators As Investment Tools

An interest rate calculator, credit card interest calculator and a compounding interest calculator, all considered a math calculator, can be helpful investment tools. An interest rate calculator tells you how much money you can earn on an investment. A credit card interest calculator shows how much money that could be invested is being wasted on credit card debt. Compounding interest calculators uses the compound interest formula to show you how fast compound interest will make your investments grow. Each financial calculator serves a different financial need, use them as a guide.