investing in your future
The Power of Compounding
When it comes to saving, the earlier you begin, the better chance you have to accumulate enough money to live comfortably in retirement. This is due in large part to the benefits of compounding. How does compounding work?
- At the end of each year you save, you receive a dividend from the bank for your loyalty and effort, and this adds up over time.
- When you save or invest, your money earns interest or appreciates, and as it accumulates, you not only earn interest on the amount you saved but also on the interest you’ve built up.
- For every 10 years you save, you earn another 10 percent on the funds you’ve contributed.
“B” is correct. Albert Einstein called compounding “one of the great mathematical concepts of our time,” but you don’t have to be a genius to make it work for you!