When Compound Interest Hurts You
Compound interest is your best friend when you’re investing or saving for a long-term goal, but it’s your worst enemy if you have debt that’s not being paid off.
Here’s an example: A borrower with $30,000 in consumer loans defers their loans for a year while they look for a job. During that year, interest continues to accrue on those loans. Once they’re ready to resume paying, they discover their $30,000 balance has grown to $33,500 because of compound interest.
To slow down the negative effects of compound interest, you should pay off your debt as quickly as possible. You can also refinance your loans to a lower interest rate. If you have credit card debt, transfer to a line of credit with single digit interest rate to help you get out of debt faster.
1. Establish a goal of when you want to be debt free
2. Create a debt snowball or avalanche payment structure(refer to the second image )
3.Create milestones to keep you motivated and get to the end.
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#2 of 3 part series about compound interest
Quote of the day 📖Law of Success/Napoleon Hill
"Do not "tell" the world what you can do "show" it!
2 82 hours ago
Thanks to Mr. Bogle, #investing was made extremely easy for the average person. Coming from negative net worth (debt) after college as the recession hit...going onto losing the shirt off my back trying to predict markets and making devastating mistakes, I learned the hard way to focus the rest of my life on using the incredible power of the #timevalueofmoney ( #compoundinterest) and the #indexfunds. Combined with my ability/mindset to put money away in the largest quantities I could/can and some other investments, which DID work out despite my failings, I’ve managed to cover bare minimum basis for retirement, which leaves me with lots of room to lead different lifestyles in the future and focus on achieving other goals until retirement age. Even through the mistakes and trials, we have to keep our goals in mind, return/stay with a positive mindset, and have the ability to recognize good advice from guys like #WarrenBuffet when we hear it. It wasn’t and isn’t easy at all - it was pure terror at times in the past - but, having good investment vehicles and advice from people such as Mr. Bogle is the key to make a lasting dent in your life. If you want to start - there’s no place better than the S&P500 index fund bought consistently over your lifetime rain 🌧 or shine ☀️ - in my personal opinion, this thing should be bought as if you were buying houses. Think big. Think long term. Stay away from anyone who says they’ve found a new way to make money in the market or anyone who seems like they are the new Wolf of Wallstreet. Lastly, again, in my opinion, you have to fuel this investing with money you earn, so focus on developing your skills (your trade, your negotiation skills, your work ethic, your business) and demand higher compensation and do 5x more than your peers - not by wasting away your life/time by working uber long hours, but by finding better, more direct, efficient ways of doing things rather than going through slow procedures and generally accepted ideas. Keep pushing to get to your goal - stay execution focused. People out there are not ready for others who have that kind of fire in their belly.
What is it and how does it pertain to you? I'm going to go LIVE around 4pm today to explain what makes MPI so much different than your 401k, IRA, and even your Real Estate portfolios. MPI is the only "secure leverage" platform that allows you with no additional risk to use your money to increase your income up to 4x as it matures. Security, Simplicity and Results merged into 1 system.
Leverage is the ability to use someone else's money to gain additional compound interest on top of whatever you were making with your money. It's the most influential action you can take to gain financial independence outside of compound interest itself... and has no starting limits, credit checks, or income requirements. Most anyone can use MPI to create the future they want.
This is why I say Pay Yourself First is the most important decision you can make financially because once you make that decision, MPI will do the rest by securely compounding your money at around 8% (slow and steady avoiding risk) but then also securely leverage your money to double that without incurring additional risk... takes less than 10 years and you will see amazing results.
Start today! Pay Yourself First. Put yourself first. Compound your money. Protect your money. Leverage your money. Picture a retirement with up to 4x increase is spendable income on the same investment somewhere else... #mpi#payyourselffirst#compoundinterest#leverage#compoundingthecompound#4xretirementincome#retirement#security#protectyourmoney#investing#investments#financialeducation#financialplanning#helpingpeople#insurance#lifeinsurance#cfp#401k#IRA#iul#wealth#money#income
Dahsyatnya bunga majemuk 📈
Albert Einsten pernah mengatakan bahwa bunga majemuk adalah keajaiban dunia ke-8, dan tentu saja dia memiliki alasannya ketika mengatakan itu. 🗿
Bunga majemuk atau compound interest memiliki pertumbuhan yang eksponensial dimana semakin cepat anda memulai ditambahkan jumlah uang yang anda investasikan, maka uang anda akan bertambah secara eksponensial juga.📈
Banyak sekali anak-anak muda yang melihat orang tuannya bekerja hampir seumur hidup tetapi tidak menghasilkan seberapa uang. Dan ketika mereka harus pensiun, mereka bahkan tidak memiliki sedikitpun uang untuk kehidupan tua mereka karena semua uang mereka sudah habis terpakai untuk kebutuhan keluarga.👨👩👧👦
Kalau anda sedang ingin membangun nama besar keluarga anda dan sebuah kerajaan kecil, mulailah mengerti tentang bunga majemuk ini dan ajarin generasi berikutnya tentang hal ini juga.💰
Bayangkan aja ketika anda memulai investasi dengan dana diatas secara konsisten selama beberapa generasi.
Anggap aja 150 tahun. Berapa kekayaan total yang akan anda ciptakan? Dan meskipun anda tidak bisa melihatnya, nama anda akan teringat sepanjang sejarah keluarga anda sebagai buyut yang cerdas. 💡
Ikuti akun kami di @zpeeps34#zpeeps34#zpeeps#anakmuda#generasimuda#inspirasi#investasi#bungamajemuk#compoundinterest#motivasi#mulaisejakdini#muda#mulaiajadulu
0 345 hours ago
This chart from #theautomaticmillionaire is amazing. I’ve read about the power of #compoundinterest before and learned about various ways of saving for #retirement but I’ve never seen the information presented so clearly. This chart shows that if you just saved and invested $3,000 a year between the ages of 15 and 20, and NEVER SAVED ANOTHER DIME IN YOUR ENTIRE LIFE, you would retire with $1.6 MILLION DOLLARS. Conversely, if you started investing $3,000 a year at age 27 and continued setting aside that same amount until age 65, you would have to invest $117,000 of your money to get $1.3 million in retirement. The teenager only had to invest $15,000 for a really short period of time (FIVE YEARS!) and ended up with almost $300,000 more than if you start investing late in your twenties. Yeah, so like NO ONE TOLD ME THIS WHEN I WAS A KID. Of course, that’s by design. This economic system is deliberately set up to make the rich richer and keep valuable resources and information about wealth building and economic security from the working class and poor. My family didn’t come from wealth and my mom was a single parent. But I had summer jobs. I worked at Blockbuster on the weekends. I worked at the mall. And you know what? I SPENT all that $ even though I was living at home and mom was providing for me. I didn’t start #saving and #investing until my late twenties and even then, I was not saving as much as I should have because I didn’t understand the importance of using the power of time to build #wealth through compound interest. And for so long, I had a very disempowered relationship to money — the topic scared and overwhelmed me. It’s taken years for me to shift not only what I know about #personalfinance but, just as important, how I FEEL. The more I’ve learned, the more passionate I’ve become about catching up and getting savvy about my #finances. Sharing this for the folks who are younger than me. Saving even a small amount of money consistently but EARLY in life can have an amazing impact on your #finances down the line.. and if you didn’t start early, you can still make critical adjustments and use the time you still have to your advantage! #themoreyouknow
How much are you contributing regularly to retirement investing?
Dave Ramsey suggests saving 15% of your pre-tax income for retirement 👵👴❤.
We have started $2k/mo, & hubby's first pay with his maxed out RRSP deduction was just deposited 😬.
It'll take some getting used to his lesser regular pay, but thankfully we followed the Baby Steps & have an emergency fund just in case (as my self-employment income is irregular).
I have mixed feelings about sending so much to RRSP's with our big mortgage balance - but will have faith in the process & trust that tax savings/compound interest will make it worthwhile in the long run 🙇♀️.
I'm also a bit concerned about the stock market, but our eggs are in 3 different baskets, split between 2 index funds & the public company hubs works for 📊.
The biggest thing is that we've established a solid process of saving/investing for the long-term (deducted automatically from now on), & that's something to be celebrated 🙌
How could a software like Hamilton help you throughout your daily life? Could it pay your daily food expense? your monthly grocery bill? or maybe even you car note?! There are so many ways that people are using this software to supplement the income they make from their daily jobs. This amazing software is taking financial stress off of thousands of people around the world.
Let's get it working for you as well! 💰🚀 CFTC DISCLAIMER: Past performance does not guarantee future results
"A lot of EA's/Algos can do great in great conditions...but how they handle bad market conditions and recover is what's important." Look at how Benjamin cost averaged out of all losing trades down to the exact second!! WE WIN AND WE TIE 💰🚀📈 CFTC DISCLAIMER: Past performance does not guarantee future results
1 2820 hours ago
You'll never grow if you're afraid to take risks. I'm a mother, a business owner, a full-time worker, and in the military. I am focusing on achieving my goals so that I can earn a better future for my family and I, to make more memories and not miss out on anything as my kids continue to grow. I have decided to surround myself around people who want the same things and have the same goals. Who's ready to join me and commit to taking a risk?
DM me for more info.
It’s interesting how people can envy other people’s situations, but won’t do anything to change their own. We get friends saying ‘I wish I could buy shares but it seems too complicated’ or ‘I wish I could get into the property market’. What they don’t realise is that they CAN. If they really want to, they absolutely can. The path to wealth doesn’t involve coming from a rich family or having a high paying job. I truly believe anyone can become wealthy if they want to be. They just have to be willing to do something about it, change their current situation whether it be their job, location, expenses, financial habits etc. It may not be a path they want to take, but it doesn’t mean it’s not possible. The power is in your hands. If you think you can or if you think you can’t, you’re right.
The $500 purchase that you just paid for on credit card, will cost you roughly $1500 to pay off. That's because of compound interest that is being compounded on daily basis on the item you paid for using credit!
This is what the lending industry is so hush-hush about! They never want you to know about it or think about it... They just want to continue to tighten the rope around your neck! To the point where you can barely breath, so they can continue to transfer your hard earned money into their accounts. "Money is never created, it's simply transferred from one person to another person"
Anybody struggling to find time to trade the forex markets successfully or anyone who is simply looking for a hands off investment solution that will make you more in one month than you would make in a whole year having the same amount sat in a saving account, why not get in touch for further details on our service. A real company providing real results under a real licensed platform @investwithfresh
Journaling: A very small and mundane thing to do, but show up everyday and write something. New habits don’t have to be impressive to be useful, but they do need to be consistent. Be persistent about doing this small action everyday.
Writing things down allows us to see our direction…like a compass. A compass doesn't tell us where we are going but it does lead us to our destination. Journaling leads us, but also allows us to course correct, because bad days will happen and we should make note of them. Even the greatest pioneers in history had bad days and made mistakes, but they follow their notes to where the want to be…they course correct their compass.
In the new years first installment of Monthly Minset for @ironlionperformance, The Benefits Of Journaling, I lay out the importance of this very simple, but very powerful tool you may not be using.
Click the link in my profile for the full blog post and a few starting places to get you going in 2019!!
I always love feedback! Holla below and let me know your thoughts!
Would you get a loan where you don’t know the interest rate or terms and the lender is broke? Yet daily, many people are putting their money in qualified plans where the tax rate is unknown and the lender is broke! It’s time to get control of your finances. #powerofzero#paylesstaxes#wholelife
Have you ever done something contrary to the majority opinion?
You've done extensive preparation and research, but at the end of the day said fuck it, and went against the grain?
When I searched "Te Araroa" and "Hammock" together before the trail, I recieved an overwhelmingly negative response.
You won't find any trees, you're only allowed to camp in designated areas, you need a tent, and you'll never find a spot to hang at holiday parks.
At first, self-doubt flooded my brain. Am I being an idiot? But after overcoming the initial fear, the negativity only fueled my desire to hammock the TA.
I have nothing against a tent, but I didn't think I would be challenged or trying something new.
When you dive into the unknown, you come away with rewards you previously haven't considered.
How much are you truly learning about yourself or growing when you take the road that's been blogged about hundreds of times and there's a couple thousand other people doing the same thing?
Maybe it's my natural tendency to tinker and experiment. For most, a thruhike is enough of a challenge on it's own.
Although I knew it would be harder, I still decided to go through with it. You might be wondering why I or anyone else would do that? That can be hard to explain.
You gain a certain confidence in yourself when you put yourself in unfamiliar situations without knowing how it will turn out. But are willing to work and figure it out. Because once you're FORCED to solve a situation, you do.
I have no illusions that hammocking the TA on its own is special or impressive to anyone. While it has taught me to be patient under trying circumstances, I expect to reap the real benefits when I'm faced with a tough decision in the future, when I'm torn between my gut instinct and the "popular way". Because the small experiences along the way prepare you for the unforeseen ones down the road.
I challenge you to buck what's popular and follow your own instinct.
Photo cred goes to our expedition photographer: @sarahskyann#teararoatrail#teararoa2018#teararoa#hikingadventures#hikingnz#hammockcamping#hammocklife#hammocking#hammock#selfconfidenceiskey#compoundinterest#selfconfident
"Compound interest is the eighth wonder of the world. He who understands it, earns it. He who doesn’t, pays it." - Albert Einstein
I have used this quote in another piece of content already but I wanted to share it again for the new followers.
In this post we can see the absolute power of compounding.
In just 30 days, doubling a penny becomes more than $5 MILLION!
Of course, you aren’t able to double your money every single day, or we would all be millionaires.
However, you are able to double your money in about 10 years if you are able to get a 7% annual return!
You can use the rule of 72 to see how long it will take to double your money with a certain interest rate.
You simply divide 72 by the rate of return (interest).
72 / 7% = approximately 10.3 years
Now, you might think that this way too slow, but remember that Rome wasn’t built in a day!
Compound interest takes a lot of time to gain real effect.
The more time passes, the stronger the effect becomes!
Just as we see with the penny example, it’s not until after 20 days that we're above $5,000
From there on out, it just takes 10 more days to reach $5 Million!
Now... imagine you’re 20 years old, and invest $5,000.
Let’s say you have 40 years to grow your money at 7% annually until you start taking money out.
This $5,000 becomes $74,872.29 after 40 years!
That’s a total increase of 1,397%
While 40 years x 7% is only an increase of 280%!
This means that more than 1,100% of your gain comes from the interest ON TOP of your previous interest!
Of course, if you add even more money every year, you will end up with a much LARGER amount!
I hope you now see the true power of compounding interest over time, so you can get on the side of “he who understands it, earns it”!!!!
Do you already make use of this eighth wonder of the world?
Let me know in the comments and please leave a like if you enjoyed the content ❤️
Compound interest! It’s an important tool for growth of your money...
Now obviously the penny doubled everyday scenario is pretty ridiculous and likely would never happen but it illustrates what happens when money compounds.
If you can figure out a way to create massive amounts of compound interest you can live off of that money for the rest of your life!
The Rule Of 72 is a great way to learn more about Compound Interest!!!
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“Compound Interest Is The Eighth Wonder Of The World.
He Who Understands It , Earns It... He Who Doesn’t ... Pays It.
Compound Interest Is The Most Powerful Force In The Universe “
-Albert Einstein -
Photo Credit: @business.driven.dream