2 Responses to “What is compounding and why is it so important in decisions such as comparing investments, loans, debt payoff?”

1. D. V Says:
   February 6th, 2010 at 3:32 pm

   I found the perfect article for you:

   http://greenarrowinvestments.com/retirerich.aspx

   This explains compounding very well. (i think)

2. Terry Says:
   February 6th, 2010 at 7:38 pm

   Compounding means you don’t take money out of a fund; you leave the interest in there to earn more interest.

   For example, if I have $100 and I earn 10% in the first year, I have $110. If I don’t add any more money, but leave that interest in the account, the next year at 10% I earn $11. This is the power of compounding.

   Most people get rich by saving early, then leaving the money alone for 20 years or more – compounding takes care of the rest.

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