Here’s the thing though, what does this information really mean for you personally ? If you reinvest that amount such that the original £1,000 and the £100 both generate interest, you’d have £1,210 at the end of year 2. It is simply the mechanism by which money grows over time.įor example, you invest £1000, for a hypothetical return of 10% i.e. How a Compound Interest Calculator Works.What Rate of Return You Need To Double Your Money To appreciate this though, it helps to go back to basics. In the age of instant results, it has never been more important to fully understand the importance of compound interest and how it can work for you. It’s easy to worry about the small details in our lives, and completely miss the trick, which is that time is the real asset that we need to understand and use properly. Where they have goals in numbers, many have not come up with an investing plan to achieve their goals.And where they have goals, they have not converted those goals into numbers.You most likely would have come across compound interest at school.įor most, it remains an abstract idea when it comes to wealth creation because: We live at a time when many are struggling to save, pay off debts and meet their regular monthly expenses.Īt the same time, there is a need for people to invest in order to meet their future needs or goals.Īlthough there is much to understand when it comes to investing money, a good place to start is to focus on foundational principlesĬompound interest is the single most important principle you need to understand, especially if you have time on your side. This might sound obvious but it is a fact that not enough people are making this real in their lives. Understanding how money works and positioning it to work for you is critical to wealth creation.
Compound Interest Calculator: Benefits and Free Excel download
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