6 Benefits of Compound Interest

6 Benefits of Compound Interest
6 Benefits of Compound Interest - Point B Planning

Grow money faster - 6 benefits of compound interest

Benefits of compound interest and savings

2 minute read

What is it? Compound interest is turbo charging your savings and investments. You earn interest not only on the initial amount that you put in, but also on the interest that has already been earned. So it’s interest on top of interest!

Imagine you stash $100 in a savings account. With compound interest, you don’t just earn a percentage on that $100. The next time interest is calculated, you earn a percentage on the new total, including the interest you’ve already pocketed.

  1. Money grows itself – With compound interest, your money doesn’t just sit there—it keeps growing. The interest you earn also earns more interest, creating a snowball effect over time.
  2. Watch your savings grow – Over the years, your initial stash can turn into a tidy sum thanks to compounding. It’s like planting a money tree that keeps getting bigger.
  3. Earn while you rest– Compound interest lets you earn money without lifting a finger. As your pot of money grows, so does the interest. Its like having a second job where you are not required to work.
  4. Time is your best friend– The longer your money has to compound, the better. Starting early gives your dollars more time to do their compounding magic.
  5. Beat inflation– Inflation nibbles away at your money’s purchasing power, but compound interest can help it keep up. It’s like a superhero cape for your savings against the eroding effects of inflation.
  6. Effective long-term planning– Planning for retirement? Compound interest is a must. Regular contributions over the years can turn into a cozy nest egg, so you can relax when the time comes.

If you would like to know more about investing and planning for the future. Please contact one of our financial planners or financial advisors that service the Seddon, Yarraville, Footscray, Williamstown and Altona areas.

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