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đŸȘ„The MAGIC of COMPOUND INTEREST

PLUS: We've got a show at Woordfees!

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MoneyMoves
September 19, 2024

Einstein famously called compound interest the “eighth wonder of the world.” In this episode, we explore why it’s considered one of the most powerful forces in the financial universe. Let’s dive in!

What is Compound Interest?

Compound interest can be described as the ultimate "growth multiplier" for your money.

It’s not just about earning on your initial investment; it's about your money making more money as both your principal investment and the accumulated interest grow together.

Prefer a quick breakdown? Watch us explain it in detail in our latest 10-minute YouTube video:

Simple vs Compound Interest: A Key Difference

With simple interest, the growth of your investment is only calculated on the original amount you invest. This means no matter how long you invest, the growth is limited to the initial investment.

In contrast, compound interest allows your growth to be reinvested, so each year you’re earning "growth on growth." Over time, this snowball effect becomes exponential, which is why compound interest is such a powerful tool for long-term wealth building.

Real life Example: Ingrid’s Investment Journey

Let’s take Ingrid as an example. At 27, she starts investing R2,500 each month, with an annual escalation of 6%. Her plan is to retire at 62, giving her a 35-year window for growth.

Over those 35 years, Ingrid will have contributed a total of R3,342,043. But thanks to the power of compound interest, her investment will be worth over R16 million at retirement. That’s exponential growth in action!

Curious how compounding can affect your own finances? Try out the Allan Gray calculator here to explore the magic for yourself.

Join us at Woordfees!

We’re thrilled to announce that we have a discourse program at this year’s Stellenbosch Woordfees! If you're in the area, we’d love for you to come say hello and chat about all things finance.

Episodes coming your way 🎬

So, what are we covering? Well, depends on who’s asking (literally!). Our aim is simple: Ask your questions, and we’ll cover them as best we can: to inform, educate, and entertain.

Season1 Topics

1. What is a TFSA and how can I use it to my advantage?

2. Can you explain the different types of investments?

3. I hear people are making money with Arbitrage. What is it?

4. Debt: Is it good or bad?

5. Life insurance - should I get it and why?

6. How to approach the new 2-pot retirement system

7. How big of a deal is compound interest?

8. Where should I invest my money?

9. Should I go the DIY route or use a financial advisor?

Who are we?😎

The Knowledge Chest

Paul holds an Honours degree in Financial Analysis from Stellenbosch University. With a career spanning investing, accounting, and education, Paul is committed to becoming the best financial planner in South Africa. Despite his many accolades, Paul insists that his greatest achievement is that he is dating a yoga teacher.

The Anchor

Ingrid holds a BA Honours in Journalism from Stellenbosch University. She is a self-diagnosed workaholic, excelling in various roles such as marketing, publicity, social media, and strategic partnerships. Ingrid's commitment to promoting wellness and balance extends beyond her professional endeavours, as she is also an avid yoga teacher.

The Magic Maker

Alwin holds a BCom in Business Management from Stellenbosch University. Alwin has a unique ability to make things happen - if you need something done, he’s your man! Alwin currently works in the alumni office at the university, connecting past and present Maties and ensuring a brighter future for the youth.

Our OfferingđŸŽ–ïž

We have extended our value offering to four key pillars:

  1. Investments

  2. Insurance

  3. Arbitrage

  4. MoneyMoves

If you’re looking for someone to chat about your finances, feel free to reach out. We’re here to help.

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