The Magic of Compounding Interest
A simple way to illustrate the magic of compounding interest is this:
Let’s say you invest RM1,000 into an investment tool that gives an average return of 6% per annum. By the end of the year, you will have RM60 more in your account − this is simple interest. The next year, you will earn interest not only on the initial RM1,000, but also on the RM60 you earned earlier. In other words, your interest earns interest and as the year goes by, you will see the magic of compounding interest!
To truly benefit from compounding interest, it is important to start investing early. The earlier you start investing, the greater the accumulated return on your original investment. It is not only about how much money you put in, but also how much time you have to let your money work for you.
Compounding interest can be the pathway to attaining your financial goals. Make the most of it and start investing early!
This article is prepared solely for educational and awareness purposes and should not be construed as an offer or a solicitation of an offer to purchase or subscribe to products offered by Public Mutual. No representation or warranty is made by Public Mutual, nor is there acceptance of any responsibility or liability as to the accuracy, completeness or correctness of the information contained herein.