The Power of Compound Interest

Photo by Mikito Tateisi

Conscious decisions to act, lead to positive changes in life.

Towards the end of the holiday season, I often find myself in the same situation. I wake up one morning and decide its time to live a healthier life. The first day back at the gym is painful. After a couple weeks as the habit forms, my energy starts increasing. Suddenly, a couple months later, a transformation is made with noticeable improvements.

​Towards the end of the holiday season, I often find myself in the same situation. I wake up one morning and decide its time to live a healthier life. The first day back at the gym is painful. After a couple weeks as the habit forms, my energy starts increasing. Suddenly, a couple months later, a transformation is made with noticeable improvements.

Getting your finances in order requires the same conscious decision to act. Better yet, the benefits are everlasting as they compound. While physical health fades without consistency, financial health can thrive for generations by simply getting started. ​

How Powerful is Compounding Interest?

Take the following example. Jane is only able to save for retirement from ages 25-35. Even though she stops early, her efforts leave her with a substantial sum. The key to compounding interest is starting early, as Jane actually grows a larger nest egg than Chris, who invested for 20 more years than Jane. ​

Source: Fidelity

Compound interest is an investing phenomenon that was famously referred to as the 8th wonder of the world, by Albert Einstein. By earning interest on both your principal, as well as all accumulated interest, long-term returns are magnified. When you start saving is much more important than how much you save.