The POWER of Compound Interest Explained with One Simple Formula

This video will dive into a financial secret that has the potential to exponentially grow your wealth over time. This secret is none other than the power of compound interest - a concept that unfortunately, many people don't understand or use to their advantage. We've found that over 69% of Americans don't really grasp the difference between simple interest and compound interest, which is why we're here to bridge that gap.

STUFF I RECOMMEND!*
Investing Apps and Tools:

Credit Cards & Credit Score:

The video begins by reflecting on the financial education, or lack thereof, most of us received during our school years. The absence of financial literacy lessons, particularly around investing, leaves many people in the dark about how to create wealth.

In this video, we demystify the concept of compound interest, breaking it down into simple, digestible terms. Using the magic of compound interest, we show you how your money can work for you to create significant wealth over time. We talk about how unlike simple interest, compound interest can make your investment grow at an exponential rate, as the interest you earn begins to earn interest on itself.

We have provided a Google sheets tool that simplifies the complex formula of compound interest. All you need to do is plug in your numbers, and it will automatically calculate your potential future earnings. This includes factors such as your initial investment, your interest rate, your compounding frequency, and the period of your investment.

One of the key points we discuss is how much money you're going to invest initially, and how that grows over time. We illustrate this by considering a hypothetical scenario where you invest $10,000 with an interest rate of 10% - chosen due to the historical average return of the stock market.

We also discuss how different your investment growth could be when comparing compound interest to simple interest. The power of compounding truly shows its magic here, making a significant difference to your wealth in the long run.

By the end of the video, we guarantee that you will have a better understanding of how to use compound interest to your advantage. With practical examples and easy-to-understand explanations, we hope to empower you to take control of your financial future. We guide you through creating an investing plan that includes regular contributions to your investments over the years.

#averagetoamazing #financialfreedom #investingforbeginners

In this video, we're going to learn all about compound interest. We're going to explore the power of compound interest and see how it can help you achieve your financial goals.

If you're interested in learning about compound interest, then this is the video for you! In this video, we'll explore the power of compound interest and see how it can help you achieve your financial goals. We'll also learn about the compound interest formula and how you can use it to invest your money. So be sure to watch this video and learn about the power of compound interest!

*Disclaimer: Bob is not a financial advisor. Please contact a professional financial advisor prior to making any decisions. Some of the links and other products that appear on this video are from companies in which Bob Sharpe earns an affiliate commission or referral bonus. Bob Sharpe is part of an affiliate network and receives compensation for sending traffic to partner sites. The content in this video is accurate as of the posting date. Some of the offers mentioned may no longer be available.

[BobSharpe]

Let's compound subscribers! If you are feeling the "normal" path of getting a job and retiring at 65 sounds awful, then subscribe and let's be friends. Together, we are taking a different path to break away.

[craignca]

Also, you can do dividend reinvestments too, which also compounds.

[declouxa]

thank you ! it took me many year to get to this cross roads of my financial life

Let the fun begin !

Goal

31 years old
Contribution 2000 / month
Time 30 years
2.5%

[stonksdays]

The formula isn't too difficult. In your example its 10, 000 x 1.10 ^ 20. Initial investment times interest to the power of times compounded

[soulseeker]

The second key to i think you should have mentioned with the rule of 72. At that 10% yes it make take 7.2 years to double. But that will mean it will double again after another 7.2 years. So 10k would be 40k in 14.4 years and 80k in 21.6, 160 in 28.8 and so on basically 320k in 36years from a 10k investment with 10% interest..

Then add the other contribution over that 36 years and you could be well over a million

[yurii_boiko]

Really nice Thumbnail, Bob! Where did you get the concept idea?

[Seoulsearch]

Always great to review the basics. Also a helpful reference for our friends and family who are just getting into investing. 👍🏼

[ashleybutac]

Just subscribed!! Excited to grow my money!!

[some-_-guy]

Thank you for your well thought out and through reviews on your channel. I subscribed several videos ago. I've watched a good many of your videos and you do a great job of giving the information straight forward. Have a good one bud!

[GUNNERakaKelt]

"Compound interest is the eighth wonder of the world." -- Albert Einstein

[TheCookingDojo]

Love this. A friend and I are forming a group were calling the united nations of stocks. Well get together with others and talk about investments. This video will be shared with the group

[MasSamurai]

another banger! thanks for making videos to help me convince my friends to start investing!

[marywest]

Where would I invest so that I can take advantage of compound interest?

[vg]

Hello, great motivation video. Question what app would I use if I buy a stock for $10 and in 10 years it goes to $300. I also want to be able to calculate dividends if that specific stock pays it. PS I tried it with Portfolio Visualizer with tesla from 2010 to current with a 10, 000 start with an addition of $100 per month. I wonder if I did it right. 1.5 million is the number I got.

[michaelperkins]

"AVERAGE" can be very misleading. Don't rely on that term but use it as a back up to see if your choices are correct.

[notNaB]

It's crazy how EVERYONE quotes the "average stock market for the past 100 years"....lol

[xst-k]

👎too basic imo for the viewers of this channel.