Investing and compound growth
Make time your biggest financial advantage.
The servant who put his talents to work was trusted with more. Investing is stewardship of what you have already been given.
Matthew 25:20–21
Interest earning interest
Compound growth means your returns start earning returns. Invest $100 a month from age 18 at an average 8% annual return and you could have roughly $350,000 by 60. Start at 28 with the same $100 and you might reach about $150,000. The ten years you skipped are worth more than the money you would have contributed, because they are ten years of compounding.
The Rule of 72
Divide 72 by your annual return to see roughly how many years it takes to double. At 8%, money doubles every nine years. At 2% in a savings account, it takes 36 years. This one calculation explains why long-term money belongs in investments and short-term money does not.
Key terms
Compound growth: Returns earning their own returns over time.
Rule of 72: 72 divided by the annual return gives the approximate years to double your money.
This week's money move
Run your own compound numbers
0 of 4 done
Week 8 check
3 questions · no grade, just a gut check
1. At 8% return, money roughly doubles every…
2. Why do index funds reduce risk?
3. An employer 401(k) match should be…