Hey! Do you know how to make your money work for you, simply by using the power of time?
Compounding interest is, essentially, interest on interest. Interest accumulates on what you put in as well as any interest that came before. It adds up faster than you might think.
For example, say you start with $10,000 and contribute another $500 every month for five years at a 5% interest rate that compounds annually. In five years, you will have around $38,000. In 15 years, you’ll have around $195,000. And in 25 years, you’ll have $600,000 and only have put in $160,000. Compounding is the key.
The earlier you start saving money, the more it will grow. For more information about compounding interest, visit southernbank.com/getwell. See you next time on Money Matters!
