"compound interest"

Ooooh the power of compound interest. Let’s dive into what it is and how it can be our secret to becoming a millionaire on a modest income.

DEFINITION
What is “compound interest”?

Compound interest is when you earn interest on both the money you save and the interest you've already earned. It's like your money is making its own money!

Here’s a simple example:

• Imagine you save $100, and the bank gives you 10% interest each year. At the end of the first year, you have $110 (that’s the original $100 plus $10 interest). In the second year, you earn 10% not just on your original $100, but also on the $10 interest from the first year. So, you get $11 this time, making your total $121. This keeps building up, so you make more each year than the last, growing your savings faster!

PRACTICAL ADVICE
How to get a bite of this compound interest

• Pop open your Roth IRA and start choosing some index funds/mutual funds to invest in. REPLY TO THIS EMAIL if you want some investing help.

HELPFUL RESOURCES
Compound Interest Calculator

• Try it for funsies: https://www.ramseysolutions.com/retirement/compound-interest-calculator

OUR COMMUNITY
What are your questions? Or share a win!

• Reply to this email with any personal finance question you have, or share with me any wins in your life! (I’ll respond to your questions anonymously in future emails)