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P is the principal, the amount of money you
initially invest
R is the interest rate your investment will earn
over time
T is the time you allow your money to grow
Here's how to use the formula:
Add all the interest you earn to
the original principal - then your interest will begin earning
interest!
Make additional contributions to the principal on a regular,
consistent basis.
A small amount of money invested on a consistent basis can grow
beyond your wildest dreams.
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Can you save one dollar a
day?
There are many great examples of the power of compound interest. A
very simple one to understand is our "dollar a day" illustration. Let's assume
the parents or grandparents of a newborn baby begin saving one dollar a day from
the baby's birth and each year that is invested into a mutual fund with an
average annual growth rate of 9%. When the baby gets older they continue
investing one dollar a day until they are ready to retire at age 65. The total
investment over this time is $23,725. The actual value of the account, though,
is now $1,094,375 because of the power of compound
interest. |
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Do you know a new parent or grandparent who would be interested in the
illustration above? Send them our free report.
Learn how to easily calculate compound interest using the Rule of 72. | 
