Sammy Rabbit Blog » compound interest http://www.sammyrabbitblog.com "You can do it, now get to it!" Wed, 15 Jul 2009 22:03:06 +0000 http://wordpress.org/?v=2.9.2 en hourly 1 Kids: Secret #2: Get COMPOUNDING to work for you… http://www.sammyrabbitblog.com/2009/01/25/kids-secret-2-get-compoundi/ http://www.sammyrabbitblog.com/2009/01/25/kids-secret-2-get-compoundi/#comments Sun, 25 Jan 2009 15:16:35 +0000 Sammy http://www.sammyrabbitblog.com/2009/01/25/kids-secret-2-get-compoundi/ Kids: Secret #2: Get COMPOUNDING to work for you. You do this by getting in the habit of saving money right away.

When you save at banks and credit unions, they pay you money – called interest. This money is extra money, money you get in addition to the money you save.
This interest helps your savings to multiply – to grow – to compound, almost magically far beyond what you might imagine. Compounding – interest earning more interest or money earning more money – is what gets small amounts to grow large in time. Think about this, if you plant one apple seed you will grow a tree filled with apples. Let’s say the tree has 100 apples. Now let’s say you plant one seed from an apple from every tree. You would now have 100 apple trees. If you kept repeating this, soon you would have thousands and thousands of apple trees. The number of apple trees you would have would compound. Well the money you save and the interest it earns works and grows almost like that – especially over longer periods of time.

Tomorrow: Secret #3. Also more on compounding soon.

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