Follow the Yellow Brick Road to Retirement: The Magic of Compound Interest Investments
24 Jul 2019
No one could argue that saving for retirement begins today and requires planning. Know the power of building towards that goal with compound interest investment
Most of life’s daily activities require human effort. Cars don’t drive themselves, the rent doesn’t pay itself, etc.
However, money is a different story; it can grow itself—when invested properly.
Keep reading to find out what makes compound interest investments so special, and how you can use them to build a retirement fund your future self will be pleased with.
What Normal Interest Is
Investments are like seeds. You place them in the ground (interest-earning investment), and then watch as they grow into something amazingly large, be it a tree or large retirement fund.
For example, say you put $100 in an interest-earning investment and did nothing with it for one year.
If the interest rate was ten percent, by the following year you’d have $110, after two years you’d have $120. And in three years you would have $130.
This happens by you simply by letting the money sit there. All the while, it increases at ten percent on the original investment of $100.
Over the course of years, this amount can really add up.
How Compound Interest Investments Earn More
Normal investments are good. However, compound interest investments are even better. They are like super seeds. Here’s how.
Let’s go back to the first example. Ten percent on $100 for one year. You get $110.
However, during the next year, things are switched up a bit.
You’re now earning ten percent on your current amount, $110, rather than on the $100 you originally invested.
These extra earnings can turn into something even bigger over time, making compound interest investments better than normal interest investments.
How it Helps Your Retirement Savings
Compound interest investments are very relevant to your retirement savings because you can gain more funds faster.
If you have a large goal, then this kind of investment can be essential to you achieving the amount you need long-term.
And by saving up a larger amount, you’ll have greater opportunities to do more of the things you enjoy such as vacationing or starting a new hobby.
How to Maximize Your Retirement Savings
Money can grow itself, but only if it’s invested properly and managed well. Here are some tips to help you maximize your retirement savings.
- Put money into investments that have compounding interest, not just normal interest. To make sure you go about this endeavor in the best way possible, consider speaking to a financial advisor.
- Learn about the retirement plans your employer offers at your workplace.
- Start as soon as you can! The more time your compound interest investment has to grow, the bigger it will be.
- If you put funds into the stock market, never ever put all your money into a single stock. Doing so is extremely risky and is not worth the stress.
Final Thoughts on Saving For Retirement
Saving for your retirement doesn’t have to be stressful.
By making wise choices with your finances and accessing the potential of compound interest investments, you’re setting yourself up for success!
Need any help? Then feel free to check out our investment services to help you reach the amount you need.
