Compounding - Sounds Interesting!
One of my heroes Albert Einstein referred to compound interest as being the eighth wonder of the world.
Interest on the interest when applied to your savings is the simple definition of this wonder. It is the result of reinvesting interest, rather than paying it out. The interest during subsequent periods is earned on the initial sum plus previously accumulated interest added as time passes.
The magic of compounding will work for you if you regularly invest your savings. It does pay to familiarise yourself with the basic concepts of simple and compound interest. Making better financial decisions and saving yourself thousands, and boosting your net worth over periods of time, is the name of the game.
My method
Saving on a regular basis is key to maximising your profits. Each month I split whatever sum can be calculated as income into 3 parts.
In my case I have three bank accounts. One is a current/checking account. One is a high interest account. One is a savings account.
50% of my earnings go into my current/checking account. This pays for life’s liabilities, entertainment, lifestyle, general spending etc. 30% goes into my high interest account from which I don’t ever intend to withdraw. This will compound over time and allow me to live off the interest. 20% goes into my general savings account that I use for investing in entrepreneurial schemes I come across thus generating a boost to my income which I split three ways each month.
Conclusion
Research the benefits of compounding the interest of your money. I believe it is vital to start to save as much as you can afford starting as soon as you can.
It is never too late to be in control of your finances. The choice is yours as to how you wish to split up the percentages. What is important is that you start saving. Good luck.
Stay safe
Kevin
Recent Comments
1
Sounds sensible...where you when I was twenty something......oh yeh I probably would not have listened then anyway LoL 🧐