Have you ever wished that you had more money, without all the fuss and effort?

Maybe you’re concerned you won’t have enough saved for r etirement? 

Fortunately there’s actually a simple way to accomplish those things if you’re willing to learn how to put your money to work for you.

It’s called compound interest, and it can help you exponentially grow your wealth.

The power of compound interest is so compelling, that it’s been often called the “eighth wonder of the world”.

Simply put, it’s interest on interest.

Compound interest is a fundamental component of wealth creation and by understanding just this one principle, you can make a significant difference to your financial independence.  

Compound interest means that you receive interest, not only on your initial investment, but also on the prior interest added to your investment.

How much interest compounds depends on three variables:

1. Interest Rate: The rate earned from savings or an investment

2. Time: The length of time money is left to compound

3. Taxes: The timing of taxation can make a big difference

Sounds simple, most people don’t people understand how powerful it is when applied or how the total return grows exponentially the longer the time frame, especially in the tax free environment of capital growth of property.

Find out why this concept is so fundamental to personal finance in the following infographic from Wealth 101

Courtesy of: Wealth 101

Read more: propertyupdate.com.au