What is Compound Interest?

Compound interest is interest that you make on your original investment and with the interest you make in prior years as well.

So, Say you have $10.00 in the bank and you get 5% interest. After your first year you would have $10.50. After the second year you would then be getting interest off of the $10.50, which would be $11.02. You may say whats the big deal thats only a couple of cents more. Lets see what the couple of cents does over a long period of time.

Lets say you get a modest return on your money of 7% and you invest only $20 a month for the next 30 years. At the end of that thirty years you would have 24,409.78

Now lets say you have a little bit more money than that to invest and you get a little bit better return on you money.

So, you now can invest $250 a month(which most people can do if they are disciplined enough) and get a return on you money of 10%. Your using this as your retirement savings and can let in grow for 35 years. Lets see if you could live comfortably when your ready to retire ...

- At the end of the 35 years you would hace saved up $901,406.03

- You would have saved almost $1 million dollars for retirement by just invest $8 dollars a day, most people I know spend
much more than that a day by eating out, buying coffee, etc....