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Put Time To Work For You

Put time to work for you is a concept that everyone should lea

rn. This concept deals with the time value of money. This concept can give you financial security that you otherwise may not have. The more time you have to save and invest, the more money you can end up with. Money invested over time is compounded so that even small amounts invested regularly can add up to impressive sums. Compound interest means that interest is added on the original principal and on the accumulated past interest, therfore making your money grow into more faster.

The sooner you get money working for you, the better off you will be. When you invest money, you will earn interest on top of interest. If you had an investment product, paying an annual interest rate of 10 percent and you had $100 invested. After one year you would have $110. After the second year, you would have $121. How is that so? When interest is compounded, you not only get the interest on the $100, you also get interest on the $10 of interest. That is the magic of compound interest.

Compound interest will turn small amounts of money into large sums of money over a period of time. You must save the money and let time do the job for you.

The time value of money is the interest rate. It very important that you understand this concept and put time to work for you. Money can out earn you. Money works twenty four hours a day, seven days a week. It does't get tired or sick and it doesn't take a vacation.

A simple way to determing how long it will take for an investment to double in value is known as the Rule 72. To use the Rule 72, divide the interest rate into 72. The answer will be the number of years it will take for money to double in value. For example, with an interest rare of six percent, it will take 12 years for the money to double (72 divided by 6 = 12). If the interest rate is 9 percent,it will take 8 years for the money to double ( 72 divided by 9 = 8).

Understanding the time value of money and how to put time to work for you, is crucial to your financial success. If you want a more in depth study and the mathematical formulas, please read this article:

http://en.wikipedia.org/wiki/Time_value_of_money Home


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