When you're young, you have an asset money can't buy: TIME. Start saving now and turn pocket change into riches.
November 8, 2007
Compound interest has been called the eighth wonder of the world. And with good reason. It magically turns a little bit of money, invested wisely, into a whole lot of cash. Even Albert Einstein -- a bit of a smarty pants -- is said to have called it one of the greatest mathematical concepts of our time.
But you don't need to be a genius to harness the power of compound interest. Even the most average of Joes can use it to make money. Trust me. This is so much easier than the theory of relativity.
Here's the gist: When you save or invest, your money earns interest, or appreciates. The next year, you earn interest on your original money and the interest from the first year. In the third year, you earn interest on your original money and the interest from the first two years. And so on. It's like a snowball -- roll it down a snowy hill and it'll build on itself to get bigger and bigger. Before you know it ... avalanche!
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