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Compounding

Many respected financial writers rightly regard compounding interest as a kind of magic wand to making money.

Suppose you invest $100 at 15% return per annum and allow the earnings each year to compound so that last year’s income earns the same percentage in each following year. At the end of 5 years your investment will DOUBLE to $201.13.

A lot of investment advisers regard a “set and forget” system as lazy or negligent. It doers not work for everyone because you may actually need the income to balance your budget, but reinvestment of interest, managed fund distributions or dividends (as part of a dividend reinvestment plan) is a sure fire wealth creation process that will amaze you as the years go by.