Compound Interest & Investment Growth
Compound interest is often called the "eighth wonder of the world" because of its remarkable ability to grow wealth exponentially over time. Even small investments can become substantial with patience and consistent contributions.
How Compounding Accelerates Growth
Example: Investing $5,000 at 7% interest, compounded annually, for 30 years:
A = 5,000 × (1 + 0.07)30 = $38,061.11
A = 5,000 × (1 + 0.07)30 = $38,061.11
Visualizing Growth Over Time
(The above bars represent how your investment's value accelerates each decade: 10, 20, 30, and 40 years.)
Strategies for Maximizing Growth
- Start investing as early as possible
- Increase your contributions over time
- Choose investments with higher compounding frequency
- Let your investments grow undisturbed