Compound Interest and Why Investment Matters

Why Investment Matters.

Interest is made when your money is put into stocks, bonds, and other investment strategies. The more money that is put in, and the more successful strategies that are executed (both short-term and mostly long-term), the more interest you make. 

Compound Interest is the concept of interest making interest. If you purchase a bond and make interest off of that bond, you can either transfer this money into cash or reinvest it. Reinvesting this interest will make an exponential profit of interest occur. In conclusion, an initial principle of cash can accumulate until you can provide a new initial principle to invest, and so on. 

Compound Interest is one of the most important concepts of investment, and why so many people choose to put their money in stocks and bonds rather than saving. Investing can supplement retirement and long-term financial stability. What matters is investment is exponential while an annual salary or income is linear. Although the majority of households in the United States have bought some form of stock, some have not. Investment does require money to start, however, even a small amount can go a long way by using the long-term concept of compound interest. For teenagers and young adults, the profit from long-term stocks and bonds will be strongly significant. The earlier someone invests, the better the result. 

So why does investment matter?

Because if teenagers and young adults start investing now, they can provide themselves with exponential growth for their future savings.

Investment Resources:

If you want to see the benefits of investment attuned with your own plans, Investment Calculator can provide attainable financial goals and give you an idea of what you can make.