Bridging the gap between saving money and investing
Here’s a little video I came across that gives the numbers on why it’s important to start investing early and the power of compound interest – since I know people learn in different ways, I thought a visual might be helpful for those that have a hard time grasping the explanation in written form. For those who are looking for a bit more entertainment in seeing the power of compound interest, you can read Compound Interest, Manhattan & the Indians
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The person who created this video had stolen content from the Vanguard website. I wouldn’t advocate supporting this director since he probably used a video camera to record his computer monitor.
https://flagship.vanguard.com/VGApp/hnw/content/SiteWide/FlashPgs/SWFlshPwrOfCompContent.jsp
This tutorial on Long Term Compounding Interest shows a graph where the monthly compounding amount of 148,940 is so much higher than the annual compounding of 146,419.
But in today’s economy, how do you achieve monthly compounding? Are there any tricks?
For example, i know of ING Direct offering GICs where you lock in your money for 4% for 6 months, so thats semi-annual interest?
Great example of the power of compounding.
Folks would be well advised to keep this in mind when taking out a loan as well.
Paul