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The Power Of Compound Interest

  This Is The "Easiest" Way To Become Wealthy  

Make your money work for you-Invest in a long-term money market account  

Do not simply save money in a bank account. Make your savings earn money for you. Accumulating serious wealth, becoming a millionaire, ensuring retirement in the age of failing Social Security; all of this can be made possible through the power of compounding interest.  

Even if every one of your businesses fails, investing ensures a healthy retirement  

Now, you cannot simply put in $50 once, and expect it to grow to $2 Million by the time you are 60 years old. However, you also do not necessarily have to put away $5k every month either...  

Below is a link to a compound interest calculator, which will show you exactly how much you can earn with any initial investment, contributions, amount of time, and interest rate.  

Click here for the calculator

The Rule of 72:  

This is a simple math equation that shows you how long it takes to double your money with compound interest: Divide 72 by the amount of interest you earn on your investment. The resulting number is how many years it would take for you to double your money.  

For example: [72] / [8% interest] = 9 years to double your money 

Dollar Cost Averaging  

Investing with long-term gains in mind means that the usual short term ups and downs of the market do not really matter to you. This is the Buy and Hold strategy. As long as you keep investing, even when prices are falling, you will come out on top. Down cycles are point of opportunity. Dollar cost averaging means that as the price falls, you will automatically buy up more shares than you would if the price was rising.  

Also, within your account you can set up automatic stops. This will automatically sell your shares, pulling your money from a crashing market.  

Types of Accounts:  

1. Savings Accounts:  

These are available at any bank. They are F.D.I.C. insured up to $250,000. They are considered extremely safe. However, the interest rates are close to nothing, you will never earn substantial money off of letting money sit in these accounts. These accounts should be used for money that needs to be made readily available.  

2. Certificate of Deposits:  

These are also known as CD's and are offered by banks. Basically, you put money into these accounts, promising to keep the money in these accounts for a set period of time. The longer the period, the higher the interest rate you will earn. The interest rate on this type of account would be higher than that of a typical savings account.  

3. Money Market Funds  

This is the type of account that this article is all about! You can open this type of account through banks or brokerage firms. They allow a limited amount of withdrawals per month and various options on wether, or when, this withdraws get taxed. These are considered safe, however they are not insured by the F.D.I.C.  

You will use this account to invest in any combination of stocks, bonds, commodities, currency, collectible, and more.  

4. IRA account  

Any variant of an IRA account through Fidelity has worked great for us. Fidelity offers great customer service, easy to use interface, and interactive investing tools (like the stops we discussed earlier). You can link your bank account to Fidelity so that it can automatically invest your money for you. Different variants will offer different options on taxes, withdrawals, etc.  

5. Company Accounts (401k)

If you are currently employed, check if your company offers retirement accounts. Usually, the company will match your monthly contributions!  

Start as soon as possible  

The earlier you start, the quicker you get the snowball rolling. Time is the most valuable variable in long term investing, the earlier you start the easier it will be to accumulate more wealth!  

All it takes is discipline  

Set aside an amount you are comfortable with, and stick to it. Invest every month for the rest of your working life. If you do this, you really can ensure yourself serious wealth.  

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