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How Compounding Works

Saving versus Investing

Compounding is the 8th Wonder of the World

Saving versus Investing

How to pay off debt

Saving doesn't create much of a return.


Without earning a return, you can't take advantage of compounding.


Investing creates a return for your money, which allows compounding to work.

What is Compounding?

Compounding is the 8th Wonder of the World

Saving versus Investing

how to pay off debt

Compounding is the magic that happens when you start earning a return, not only on your contributions, but also on your prior year returns.


If you invest $1,000 a year, and earn 10%.


In year 1, you would earn $100.


In year 2, you would earn $110 (not $100), because you earn 10% on $1,100.

Compounding is the 8th Wonder of the World

Compounding is the 8th Wonder of the World

Compounding is the 8th Wonder of the World

how to pay off debt

Compounding really does wonders when you give it time and consistent contributions.


Look at this example:


This assumes a $500 per month contribution over 40 years.


The orange line assumes no return.


The grey line assumes an 8% return.


Without compounding, you'd have $240K.

With compounding, you'd have $1.6M.

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