Achieve Financial Freedom Using The Power Of Compound Interest

Copyright 2005 William Tan
“The most powerful force in the universe is compound interest”
- Albert Einstein
Ask almost anyone about compound interest and you will hear them
say “yeah, I know about it” If everyone truly understands what
compound interest is, then we probably will not have so many
people having credit card debts that is piled up to the ceiling
The sad truth is the financial sector is using this to their
advantage against general public They are making millions and
millions from the people
So what is compound interest? To explain in the simplest way -
basically interest paid on interest and principal over a period
of time If you have $10,000 today, and you make 3% per year
from you bank, you would have $10,300 by the end of the year If
you continue to leave your money there for the 2nd year, you
will now have accumulated $10,609 3rd year – $10,927 So on and
so forth By compound interest, you are actually making your
money work harder for you $10,000 compounded yearly at a 10%
per year will double your money in 7 years In 28 years, you
would have about $160,000 $160,000 from a small amount of
$10,000!
While all that sounds really nice and cool to be financially
free when you retire – seriously, who would want to wait around
to be that old to be finally financially rich? I certainly
wouldn’t be in that crowd So how do we get this working for us?
Notice, how credit card charges can work against you? Or how
your bank is telling you that they calculate interest daily that
is supposedly to your advantage? Start to have an idea The
large corporations are the one that are using this powerful tool
to their advantage And what do we get? Well, mutual funds and
stocks, typically, only provide yearly dividends Likewise, the
banks on their fixed deposits – yearly – with pathetic interest
rates that is normally lower than inflation rates You get a
raise only once or at the most twice a year Almost anything,
which is to our advantage, is compounded on a yearly basis So
how can we make use of this incredible force to help us in our
goal to achieve financial freedom?
For compound interest to work for us, we have to see frequent
compounding The more frequent the better it is Half yearly
compound is definitely better than yearly Quarter is better
than half-yearly Compounding by the seconds would be most ideal
and compounding interest over a long period would really magnify
its power So, when you want to see the real power of compound
interest and to start getting your hard earned money working for
you, you need to choose an investment vehicle that can provide:
* Excellent returns (minumum 5%) * Frequent Compounding (at
least monthly) * Low Risk with High Winning Percentage (90% or
more) * Allows you to withdraw whenever you want (stop anytime -
liquidity)
Start having your dollar work harder with compound interest and
financial freedom is really not far away

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