Saving & Investing
The Miracle of Compound Interest
OK, say you save $50 a month for 100 months. How much do you have?
Well, if you shove it under your mattress, you end up with $5,000. And possibly a lumpy night's sleep.
But if you put it in a bank account paying 3 percent interest, you'll end up with almost $5,500 - a 10 percent "bonus" even though the account was paying 3 percent interest.
This is the miracle of compound interest - the phenomenon in which interest earns interest, building on itself over time.
And the more you save and the longer you save, the faster those numbers grow.
For instance, if you can stash $100 every month into an account paying 5 percent interest and you keep doing that for 30 years, you would have deposited $36,000. But you'll end up with...
...wait for it...
...are you ready...
$83,672.63
Not bad, eh?
Here are links to several compound interest calculators. Go ahead. Play with them and have some fun, but don't forget to actually do it - start saving now and add to that pot every single month.
What Will It Take to Become a Millionaire Calculator
www.math.com/students/calculators/source/compound.htm
www.econedlink.org/interactives/interest.html
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