My thought for today is (yes, I KNOW, remember I am new to this!) the ‘miracle of compound interest’. It seems to be a popular topic at the moment, probably because it appears to be a risk-free way of making free money. The basic principle is that you find the savings account that gives you the highest rate of interest, put your money in it, and…er…that’s it. The interest is added to your savings, increasing their value, then further interest is calculated on the increased total, and so on and so on. As long as you leave it there, your savings will continue to grow.Of course there is always a price to pay for safety. In this case it’s one of time. Depending on the size of your savings (and the rate of interest you can find), it will take a long time to make decent money. But then, we all know that the only way to get rich quick is to rob a bank, right? (and no, winning the lottery doesn’t count - see previous post). By embracing compound interest, your money (even just your last dollar) is growing WITHOUT YOU HAVING TO DO ANYTHING. The Motley Fool explains ‘the miracle of compound interest’ much more clearly than I can.
I think I’m in love. Again.
Post a Comment