Monday, May 24, 2010

How a $1,000 investment grows over time

As your income begins to increase, so does the importance of savings and investment planning. At the beginning, people save to build up an emergency fund for unexpected circumstances. As time goes by, people will spend more attention to investment using surplus as means of accumulating wealth, either for children’s education or for retirement which are both major worries. Various investment platform which as stocks, government or corporate bonds, mutual funds, properties, and so on are used to acquire wealth.

8% or 10% return, you might be thinking what’s the big deal? It’s just 2% difference. Through the power of compound interest, a higher return means more money as time goes on, generating more than twice the money over a 40-year period! The period which you kept your money invested in is just as important as the rate of return of the investments. The magic of compound interest allows you to accumulate more than twice as much capital by investing for 40 years rather than 30 years. This is why it is so important to create strong savings and investment habits early.

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