Organic Investments

 

THE EFFECT OF COMPOUNDING OF FEES OVER TIME

Compounding makes a sum grow at a faster rate than simple interest because in addition to earning returns on the money you invest, you also earn returns on those returns over time. This is what led Albert Einstein to label compound interest the eighth wonder of the world. For example if at age 25 you invest $250 every month and assume an annual average rate of return of 8% you will have $878,570 by age 65. However if you start at age 35, your return goes down to $373,073 and if you start at 45 years of age you will only accumulate $148,236 by age 65. So it is important to start saving as early as you can in order to maximize the effect from compounding. Likewise, a fee charged to your invest

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