???? The Power of Compound Interest: Turning Small Savings Into Big Re…
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When it comes to building wealth, there’s one financial principle that stands above the rest — compound interest. Often called the eighth wonder of the world, this simple yet powerful concept can transform modest savings into a substantial fortune over time.
Let’s explore how compound interest works, why it’s so effective, and how you can start making it work for you today.
???? What Is Compound Interest?
Compound interest means earning interest on both your original money (the principal) and the interest it already earned.
In other words, your money begins to make money — and then that money makes even more money.
Formula:
A = P (1 + r/n)ⁿᵗ
Where:
- A = final amount
- P = principal (starting amount)
- r = annual interest rate
- n = number of times interest is compounded per year
- t = time (in years)
Even if math isn’t your thing, here’s the takeaway: the earlier you start, the greater your gains.
???? The Magic of Time
Let’s say you invest $1,000 at 8% annual interest, compounded yearly.
- After 1 year: $1,080
- After 10 years: $2,159
- After 20 years: $4,661
- After 30 years: $10,063
That’s a tenfold increase without adding another dollar!
Now imagine investing $100 per month in addition to that — the growth becomes exponential
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