NO! I don't invest my money!

So you DON'T invest your money, but you want to learn. Welcome back! ?

Let’s start with the basics:

Time is of the ELEMENT meaning the earlier you start, the better. Why? Because of “compound interest” (or compound profit – Shariah compliant)

What’s compounding? Well put simply, if you invest $100 for a year at 10% - end of the year you’d have $110 in your bank account.?

Now, if you take that $110 and invest it for ANOTHER year, you’d have $121! In 10 years, that’s $259.37.

Notice now your end amount keeps increasing - well, that’s compounding. The interest you earn on your original investment + on the interest amount (or the profit on your profit + principal investment)!

Now imagine, that you invest an additional $100 every year – adding it to your pot that brings your amount to $1,853.12 in 10 years – and the larger you invest the bigger your pot.

Now compare this to having the $100 in your bank account and adding a $100 to your savings every year WITHOUT investments – you’d be left with $1000 only vs the $1,853.12 discussed earlier.

Also, you’d remember that the $1000, would probably be of less value if things around you were getting more expensive i.e. inflation (refer to previous article)

OK – so if I keep my money “rolling” for longer, investing and investing again – I’d end up with a lot more. CORRECT.

Now, if you start at 20, and keep investing until you’re 60.? You’d have a good 40 years for your money to grow. So, it keeps growing, you keep investing – your “amount” gets bigger.

If you start at 30, that drops to 30 years of investment – Great, because we “it’s never too late to start” but it affects your earnings.

Point is, it just means you should be aware of the impact of TIME.

Key points to remember:

·??The earlier you start the better

·??Compound interest (profit) is your friend

Then meet me again next week, we’ve got a few things to unwrap

Resources:

Want to customize the math to your own savings/earnings potential – you can use excel or this calculator comes in handy https://www.nerdwallet.com/calculator/compound-interest-calculator and is easy see the charts too.