Many may not have heard of the power of compounding. Some may not even know how powerful it can be. Here, I shall revisit the effects of compounding to serve as a reminder for myself and those who are interested.
First we shall look at what happens when you
Do Not Compound your money after an initial investment of $10,000 growing at 5% and 10% respectively (5 - 10% per annum is not hard).
| Year |
Capital |
5% Return |
Capital |
10% Return |
| 1 |
$10,000.00 |
$10,500.00 |
$10,000.00 |
$11,000.00 |
| 2 |
$10,500.00 |
$11,000.00 |
$11,000.00 |
$12,000.00 |
| 3 |
$11,000.00 |
$11,500.00 |
$12,000.00 |
$13,000.00 |
| 4 |
$11,500.00 |
$12,000.00 |
$13,000.00 |
$14,000.00 |
| 5 |
$12,000.00 |
$12,500.00 |
$14,000.00 |
$15,000.00 |
| 6 |
$12,500.00 |
$13,000.00 |
$15,000.00 |
$16,000.00 |
| 7 |
$13,000.00 |
$13,500.00 |
$16,000.00 |
$17,000.00 |
| 8 |
$13,500.00 |
$14,000.00 |
$17,000.00 |
$18,000.00 |
| 9 |
$14,000.00 |
$14,500.00 |
$18,000.00 |
$19,000.00 |
| 10 |
$14,500.00 |
$15,000.00 |
$19,000.00 |
$20,000.00 |
| 11 |
$15,000.00 |
$15,500.00 |
$20,000.00 |
$21,000.00 |
| 12 |
$15,500.00 |
$16,000.00 |
$21,000.00 |
$22,000.00 |
| 13 |
$16,000.00 |
$16,500.00 |
$22,000.00 |
$23,000.00 |
| 14 |
$16,500.00 |
$17,000.00 |
$23,000.00 |
$24,000.00 |
| 15 |
$17,000.00 |
$17,500.00 |
$24,000.00 |
$25,000.00 |
| 16 |
$17,500.00 |
$18,000.00 |
$25,000.00 |
$26,000.00 |
| 17 |
$18,000.00 |
$18,500.00 |
$26,000.00 |
$27,000.00 |
| 18 |
$18,500.00 |
$19,000.00 |
$27,000.00 |
$28,000.00 |
| 19 |
$19,000.00 |
$19,500.00 |
$28,000.00 |
$29,000.00 |
| 20 |
$19,500.00 |
$20,000.00 |
$29,000.00 |
$30,000.00 |
It takes 20 years to double the money if it is growing at 5%pa and takes 10 years to double if it is growing at 10%pa.
But take a look at what happens if you leave it to compound…
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