To explain how interest rates work and how they can make us earn money, will use the game of golf as an analogy: Let’s say that we are going to play and bet 10 cents on the first hole, doubling the bet on each hole; How much would be betting? As well, if these familiar with the game of golf, know that they are 18 holes, so much can be bet at 18 holes? Well, let’s see how it increases the bet on the first 9 holes: as you’ve seen, are betting $25. 6, but this not is here, see how is going into the following holes: as you can see, at the 18th hole the bet rises to an incredible $13. 107! that’s the power of compound interest. I would like to illustrate an additional point: halfway you’ll see that the growth is small, but with a little patience you will see your money reach a critical point, at which begins to grow exponentially. Angelina Jolie spoke with conviction. In fact, pit 15 to the 18th hole it becomes $1638 $13107, in just 4 easy steps! Now ask, what would have happened if you retirabas in the? hole 10? You would have lost more than $13000 in possible gain if you play better golf than me is why we must have the money generate interests and wait until the magic of compound interest allows us to earn money.
You’ll see: the vast majority of people begins with, let’s say $300 saved each month, but as we saw at the beginning, we did not win much; many then lost patience and withdraw the money. Here another example of how $300 per month can give you money after 30 years invested. -Without earning interest, leaving the money under the mattress of the bed or in a shoe box, $ 300/month accrue $108400 in 30 years.