What is compounding and why is it so important in decisions such as comparing investments, loans, debt payoff?
Posted in Investing on 07/13/2009 06:02 am by
angel_rat_83 asked:
What is compounding and why is it so important in decisions such as comparing investments, loans, debt payoff order.
Florence
What is compounding and why is it so important in decisions such as comparing investments, loans, debt payoff order.
Florence
07/16/2009 at 5:24 am
Bernice
Compounding means you don’t take money out of a fund; you leave the interest in there to earn more interest.
For example, if I have $100 and I earn 10% in the first year, I have $110. If I don’t add any more money, but leave that interest in the account, the next year at 10% I earn $11. This is the power of compounding.
Most people get rich by saving early, then leaving the money alone for 20 years or more – compounding takes care of the rest.
07/19/2009 at 8:14 am
Regina
I found the perfect article for you:
This explains compounding very well. (i think)