The 3 components that determine how much money you will have in the future are:
1. the amount of money invested,
2. the length of time invested, and
3. the rate of return.
The earlier you invest, the more you invest, and the higher the rate of return, the more money you will have in the future.
The primary attraction to investing in stocks is that the long-run rate of return is higher than the interest earned in bank accounts or bonds.
With compound interest, the last few years of compounding make the most difference.
Additional notes:
The rule of 72 is an easy rule of thumb that tells you how often your money doubles. Divide 72 by the percentage rate of return to determine the number of years required for your money to double at that rate of return.
1. the amount of money invested,
2. the length of time invested, and
3. the rate of return.
The earlier you invest, the more you invest, and the higher the rate of return, the more money you will have in the future.
The primary attraction to investing in stocks is that the long-run rate of return is higher than the interest earned in bank accounts or bonds.
With compound interest, the last few years of compounding make the most difference.
Additional notes:
The rule of 72 is an easy rule of thumb that tells you how often your money doubles. Divide 72 by the percentage rate of return to determine the number of years required for your money to double at that rate of return.
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