2 Comments to “What is compounding and why is it so important in decisions such as comparing investments, loans, debt payoff?”
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Terry said:
On April 10th, 2008 at 9:12 pm
Compounding means you don’t take money out of a fund; you leave the interest in there to earn more interest.
For example, if I have $100 and I earn 10% in the first year, I have $110. If I don’t add any more money, but leave that interest in the account, the next year at 10% I earn $11. This is the power of compounding.
Most people get rich by saving early, then leaving the money alone for 20 years or more – compounding takes care of the rest.
On April 10th, 2008 at 9:12 pm
Compounding means you don’t take money out of a fund; you leave the interest in there to earn more interest.
For example, if I have $100 and I earn 10% in the first year, I have $110. If I don’t add any more money, but leave that interest in the account, the next year at 10% I earn $11. This is the power of compounding.
Most people get rich by saving early, then leaving the money alone for 20 years or more – compounding takes care of the rest.
On April 13th, 2008 at 4:30 pm
I found the perfect article for you:
This explains compounding very well. (i think)