Compound interest “He who understands it, earns it; he who doesn’t, pays it,” Albert Einstein reportedly said. Having compound interest working in your favor is one of the best ways to generate wealth today. The beauty of compound interest is that it allows you to earn interest on your interest – so that while you have to sweat to earn the money you initially invest, from then on your money works on your behalf. There are three rules to start benefitting from compound interest:
Reinvest the dividends
In order to start benefitting from compound interest, the dividends earned must be reinvested over a long period of time. This allows for future dividend payments to be paid on top of past dividend payments. Watch your account multiply!
Invest over the long term
Compound interest and time go hand in hand, the longer you save or invest the more the account grows! Those who benefit from compound interest the most are those who are saving/ investing for long periods of time. Don’t think in terms of 3-5 years consider 15-30 years enjoy the real benefits of compound interest.
Keep adding money
Consistent contributions adds fuel to the compounding flame. Overtime the earnings gained from your monthly contributions add up. to take full advantage of compound interest you have to make a conscious effort to keep investing/saving. Make a plan to set aside a set figure to invest on a monthly basis.
Investopedia.com has some great explanations on the pros and cons of compound interest for further reading.
The longer you leave your money untouched, the more powerful the compounding effect becomes. the wealthy have figured out that in order to retain wealth you must have compound interest working in your favor and not against you. Saving with us allows you to take advantage of compound interest. This is a benefit the banks do not give to ordinary account holders. It’s high time you start benefitting from compound interest! Start your account with us today!