Compound Interest - The Magic of Investing

In the life of any entrepreneur, figures call it numbers are the most essential. For every investment with figures attached to its vision and mission, his success would not be far fetched.

When talking about investments, simple interest yield is not as important as compound interest yield. Compound interest being a mathematical wonder, when utilized in business practice, it turns a negligible small fund into a monumental fortune.

To get the best of compound interest, the available negligible small fund must be invested in a profit yielding venture and regularly reinvested with its profits over a long period of time. Regularity of re-investing the available fund is sine qua non to achieving any set target with compound interest. Time, referring to long period of investment is key if compound interest must become relevant.

Compounding of interest could be achieved in any given business. In ordinary investment, it connotes constant turn over in sales. However, when a standard action plan is set in place, it makes the projection more achievable. 
The following must be clearly set out- 
Amount to be invested
Regularity of investment
Annual rate of returns
Number of years of the investment.


Let's look at an example, if a 20 years old man has chosen to invest $1,000.00 dollars per year for 40 years period at the rate of 15% compound interest, what will he have at the end of his investment?

Yearly investment - $1,000.00 
Number of years - 40 years 
Annual compounding rate - 15% 
Total yield - $1,779.090.31

The above figure looks magical yet realistic. It is achievable.

Only one thing is important towards realizing this figure and its like- long term projection and patience. One must realize that the process is very slow and could be boring yet the finishing turns out great.

Investing with compound interest approach is quite advantageous for the fact that the amount of money to be invested annually is proportionally small and affordable to anyone who opts for it. It could be done personally in an investment or other certified investments. It could be obtained in bonds, certificates of deposits, mutual funds, ISUSU, and mortgage financing.

However, many people are not aware of such investment windows due to stereotyped disposition to finance. Also many see it as a lazy vehicle to wealth creation. Lastly only a negligible few can actually do the mathematical computation involved in the business plan.

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