Why Is Compound Interest Important To Us
So why is compound interest important to us?
Compound interest on your investments can build up into a nice little pile of money over time. The chart below shows how a modest 5% rate of return can add up.
|5% Rate of Return||Monthly Investment||Monthly Investment||Monthly Investment|
|5 years||10 years||20 years|
|$5,000||$73.52 a month||$32.20 a month||$12.16 a month|
|$10,000||$147.05 a month||$64.40 a month||$24.33 a month|
|$20,000||$294.09 a month||$128.80 a month||$48.66 a month|
|$50,000||$735.23 a month||$321.99 a month||$121.64 a month|
In the above table, if you invested just $121.64 a month for 20 years, and earned a modest 5% rate of return on that money; you would then have $50,000 dollars.