FREETRADE INFORMATION
You can compound your wealth by investing It’s always a good thing to take action to grow your personal wealth. What’s even better is using the money you have made to increase the amount by which your wealth increases. This is known as compounding. In simple terms, it means that the money you have made already will help you earn more money in the future. To take an example, let’s say you manage to get a 5 per cent annual return on a £10,000 investment. Assuming you keep your gains invested here’s what you’d make over the years. Year Zero - £10000 Year One - £10500 Year Ten - £16289 Year Forty - £70400 In this same example, we’d start in year zero with £10,000 and it would grow in value by 5 per cent to £10,500 over the course of a year — a £500 increase. But if the investment increased by 5 per cent again the following year, the value would increase by 5 per cent of £10,500 — £525 — which is more than it did in the first year. As time goes by, the amount by which your wealth increases ...