Compound Returns: A Remarkable Way to Create Wealth
Updated: May 5
There are many ways to make money with money. It can be invested long or short term in many ways, each of which has the potential to make a little or a lot of money through growth, dividends and interest. Here’s how:
Depending on where you place your money and the interest, dividends, or growth it earns, your initial investment or principle can generate a return. This return can be added to the initial investment and the cycle begins again - only this time, the returns are generated on the principal plus the additional money earned. Doing this over and over creates a compounding effect that can create wealth passively. Combined with other wealth strategies, this is expected to be a powerful way to build wealth and experience the freedoms and choices that wealth brings.
Here are some typical and not-so-typical ways you can use compound interest to create wealth:
Start a savings account at an early age- A lot of families begin an account for a child at birth. The power of compound interest gets rolling at a very young age. Starting sooner than later means you can save smaller amounts that ultimately turn into big numbers. Even a small deposit like $100 per month could create a millionaire outcome by the time your youngster is ready to retire.
Get a retirement account- Some employers offer excellent retirement programs. Many even pay a contribution each month and the money could have preferred tax treatment. This money is working right alongside you throughout your career, building compound interest and making you wealthy. In most cases, you can keep these accounts growing even if you leave that employment.
Utilize the market- You don’t have to be a Wall Street guru to maximize returns. There are plenty of ways to invest and save with or without a lot of risk. Check around and find a financial advisor who shares your philosophies and speaks to you in ways you can understand. Having a financial planner in your life should feel as easy as having a trusted friend. They can help you find the right amount of risk and interest to help you reach your goals.
Compound returns is a remarkable tool for building wealth. Using investment accounts alongside other wealth-building activities can create wealth and give you the choices that you want.
This content was created by Piggy Makes Bank and presented by Mountain Flower Investments & Planning.