Put Compound Growth to Work for You

Individuals who start early by taking control of their financial planning should be aware that the extraordinary power of compound growth will bring them a long way. Compound growth is the process of generating earnings on your asset’s re-invested earnings. Basically it requires two things: time and the re-investment of your earnings. The more time you can give your investments, the more you will be able to accelerate the income potential of your original investment.

When it comes to saving, some people start early and some delay the saving process by a few years. The problem is that you cannot make up for lost time when it comes to compound growth. To demonstrate we will take a look at the graph below. It represents two savers, the early saver starts saving at the age of 21 and saves $5,000 per year for 10 years, the late saver starts saving at the age of 31 and saves $5,000 per year for 30 years. 

The results are clear. The early saver has built a fund worth almost 30% more than the late saver. Just like Albert Einstein once called compound growth “the greatest mathematical discovery of all time”.