How my dad taught me the power of compound interest - Business Insider

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Owning a pricey purse is nice, but compound interest is better

takes into account more information than simply the principal amount you invest, the rate of return, and the time period of investment. That's the simple interest formula.

For example, let's say you'd like to invest $10,000 at an annual interest rate of 3%, compounded monthly for 20 years. How much money will you have made at the end of those two decades? That value would be 12 times each year for 20 years, or 240 total times. At the end of those 20 years, your $10,000 investment will have grown to roughly $18,207.55 at a 3% interest rate, having given you a return of over $8,207. Who couldn't use that?

 

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