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Investing6 min read

The Magic of Compound Interest: How $100 Becomes $1,000

Discover why Einstein called compound interest the "eighth wonder of the world."

Compound interest is like a snowball rolling down a hill - it starts small but gets bigger and bigger!


Simple vs Compound Interest:

  • Simple interest: You earn interest only on your original amount
  • Compound interest: You earn interest on your interest too!

  • Example with $100:

  • Year 1: $100 + 10% = $110
  • Year 2: $110 + 10% = $121 (not just $120!)
  • Year 3: $121 + 10% = $133.10
  • Year 10: $259.37
  • Year 20: $672.75
  • Year 30: $1,744.94

  • The Rule of 72:

    Divide 72 by your interest rate to see how many years it takes to double your money.

  • At 6% interest: 72 ÷ 6 = 12 years to double
  • At 10% interest: 72 ÷ 10 = 7.2 years to double

  • Why Starting Young Matters:

    If you save $1 per day starting at age 10, with 7% annual returns, you'd have over $100,000 by age 50!

    Ready to Put This Into Practice?

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