If you only learn one thing from us here at Rask Finance make it this:

The Power Of Compound Interest

Compound interest is the most important finance concept anyone can ever know.

But it's the most under-appreciated.

Most of us know what it means.

You: "It's interest on interest. Pfft, everyone knows that!"

Sure, everyone knows about it.

But less than 10% of us take advantage of its power.

Imagine this...

You start with $0 today. But, you can save $50 per week.

Then, you invest your money for a 10% yearly return for 40 years.

That doesn't sound too hard right?

It's like... the price of a chicken parma (parme?) and (a few) pots.

Here's what you need to do: Plug those numbers into the calculator below and see what happens...

(note: compound frequency = "YEARLY")

 

Alternative Strategy

So what?

Notice how just $50 per week turns into a life-changing amount of money?

But can you see how it takes many years to start making the BIG bucks?

That's compound interest.

Now what?

Have a play around with different numbers in the calculator above:

  • How much more can you save? $100 per week? $200?!
  • Can you invest a lump sum today?
  • What happens if you delay starting your investing for a few years? (click the "alternative strategy" button) (hint: delaying sucks)

Remember this lesson. 

Compound interest is the most powerful finance concept you need to know - and USE.

It's not about how much you can make in just one year. It's about how much money you can make over 10, 20 or 30 years.

Little bits, lots of times.

Bookmark or save this page and come back to it regularly.

Want a cool story, Hansel?

Theodore Johnson was the US postal service worker who never made more than $US14,000 per year but had $70 million put aside by age 90.

As Tony Robbins notes in his book Unshakeable, all Johnson did was save 20% of his salary (incl. bonuses), and invest in his company’s shares. But most importantly, Mr Johnson never underestimated, “the awesome power of disciplined saving combined with long-term compounding.”

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