Compound Interest to help get you started in making this year count
What steps have you put in place to get you started towards achieving your goals this year.
Our post making this year count had a huge response which is great. More importantly is if everyone has not just read the article but thought about ways they can get started.
Everyone will have different ideas, savings capacities and goals they want to achieve.
No one way is the right way.
There are a lot of investment related articles that talk about making your money work for you.
You work hard for your money so it is worth researching the various investment areas that are available to make sure it is working hard for you.
One way to do that is compound interest. This is beneficial right from the get go. You can open a progress saver or bonus interest savings account that rewards you for depositing regular amounts and making no withdrawals.
By making regular deposits and no withdrawals you are able to achieve interest on your savings. Over time you will receive “compound interest” on that initial deposit and the interest it earned.
What is compound interest?
ASIC moneysmart explains Compound interest as “….like double chocolate topping for your savings. You earn interest on the money you deposit, and on the interest you have already earned – so you earn interest on interest. An online savings account paying monthly interest is an example of an account that earns compound interest.
Compound interest is different from simple interest. With simple interest, interest is paid at the end of a specified term, although if the term is more than 12 months, interest may be paid annually. A term deposit is an example of an account that earns simple interest.”
For the whole article and examples click here
This is just one way to get your money working for you. We will be sharing other ways to save money and budget tips here. Be sure to sign up and follow our blog top right of this page so you don’t miss any.
We hope your off to a good start and have already set up that direct credit to your savings account. More importantly ensure that this account your savings is being deposited is a savings account that is working for you.
For those that already have investments or mortgages it may be more beneficial “parking” the money in an offset account of a variable interest loan. This potentially can save you much more than the banks are prepared to pay for cash in bank options. Either way, savings is savings so just get started.
There will be more on compound interest in future posts and how to use it to save thousands and years off your mortgages.