One of the strategies I use to build wealth is to let compounding work in my favor. The power of compounding with time can yield outstanding results. The higher the percentage earned and the longer the time, the greater the return. The table below shows the multiplier effect of compounding by percentage earned and time.
|Multiplier by Percentage Return|
For example, $1000 invested at 4% will be worth $3,200 in 30 years. At 10%, the value is $17,400 after 30 years or a whopping $305,000 after 60 years. The great news is that 10% average returns are achievable. 10% is the average return of the stock market since 1926.
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