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#21: The Finance Flash Go Podcast | Important Topics About Money | The Magic of Compound Interest
This episode of the Finance Flash Go! podcast is all about the magic of compound interest.
Compound interest is magic. In fact, Einstein has been quoted as saying it is the most powerful force in the universe. It never rests. It can be working against you or for you. It works against you in the form of interest on debt. It works for you in the form of yield or return on investments. The sooner you can have it stop working against you by paying off debts and get it working for you by investing wisely, the sooner you will reach financial freedom!
Just a basic primer on why compound interest is so awesome. Let’s say that you have $10,000. You can hide it under your mattress for 30 years and you will have…ta da…$10,000.
But, let’s say that you invest this $10,000 in an investment vehicle, let’s say a total market index fund, that returns 7% net yield every year. So, after one year it yields 7% of $10,000, or $700. Now you have $10,700. Pretty good. But…the next year, year 2, it yields 7% not of $10,000 but of $10,700 and so on and so forth for 30 years. So, after 30 years you would have about $76,000! Now let’s imagine you put in $10,000 every year instead of just the first year, you would have about $945,000! Not we’re talking. If you had just saved this money and not taken advantage of compound interest, you would have only $300,000 or $10,000 x 30.
That.is.magic.
Please enjoy the Finance Flash Go podcast! We plan to release a new episode every weekday answering important finance questions. If you ever want to submit a question to our podcast, send an e-mail to [email protected], and please be sure to check out Jordan Frey’s blog prudentplasticsurgeon.com where he gives great financial advice.
A brief disclaimer While we are providing knowledge and awareness around financial topics in this show, we are not held responsible for any financial decisions you choose to make in response to the podcast. We hope to provide accurate information in regards to money and different methods of wealth creation, but it is always the learner’s responsibility to due their due diligence before making important financial decisions.
We hope you enjoy the show and thanks for tuning in, and if you like the podcast please subscribe, share, and leave us a review on the podcasting platform of your choice!
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By Taylor Brana
5
55 ratings
This episode of the Finance Flash Go! podcast is all about the magic of compound interest.
Compound interest is magic. In fact, Einstein has been quoted as saying it is the most powerful force in the universe. It never rests. It can be working against you or for you. It works against you in the form of interest on debt. It works for you in the form of yield or return on investments. The sooner you can have it stop working against you by paying off debts and get it working for you by investing wisely, the sooner you will reach financial freedom!
Just a basic primer on why compound interest is so awesome. Let’s say that you have $10,000. You can hide it under your mattress for 30 years and you will have…ta da…$10,000.
But, let’s say that you invest this $10,000 in an investment vehicle, let’s say a total market index fund, that returns 7% net yield every year. So, after one year it yields 7% of $10,000, or $700. Now you have $10,700. Pretty good. But…the next year, year 2, it yields 7% not of $10,000 but of $10,700 and so on and so forth for 30 years. So, after 30 years you would have about $76,000! Now let’s imagine you put in $10,000 every year instead of just the first year, you would have about $945,000! Not we’re talking. If you had just saved this money and not taken advantage of compound interest, you would have only $300,000 or $10,000 x 30.
That.is.magic.
Please enjoy the Finance Flash Go podcast! We plan to release a new episode every weekday answering important finance questions. If you ever want to submit a question to our podcast, send an e-mail to [email protected], and please be sure to check out Jordan Frey’s blog prudentplasticsurgeon.com where he gives great financial advice.
A brief disclaimer While we are providing knowledge and awareness around financial topics in this show, we are not held responsible for any financial decisions you choose to make in response to the podcast. We hope to provide accurate information in regards to money and different methods of wealth creation, but it is always the learner’s responsibility to due their due diligence before making important financial decisions.
We hope you enjoy the show and thanks for tuning in, and if you like the podcast please subscribe, share, and leave us a review on the podcasting platform of your choice!