| Compound Growth |
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| Think about that apple you just ate. If you took the seeds and planted them, you might have a few apple trees over time. If you planted the seeds from all those apples, you could have a whole orchard!
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How would you like to earn money in your sleep? Well, thanks to the "magic" of compound growth, you can! Compound growth happens when your investment's earnings are invested again to give you more earnings over time. It's like getting earnings on your earnings.
Why does it make a difference? Compound growth puts time on your side. For each dollar you save, the younger you are when you save that dollar, the more money you'll have in retirement.
Example. Let's say you found an investment that paid 10% interest each year. If you put $100 in to start, let's compare how long it would take you to double your money.
Without compound growth — Taking interest out of the investment every year, it would take you 10 years, earning $10 per year for 10 years. You'd earn $100 in 10 years.
With compound growth — Reinvesting your earnings, you'd earn 10% interest on $110 after the first year, 10% interest on $121 after the second year, and so on, taking you only 8 years to double your money.
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