Maximizing Wealth

Hey People

One of the greatest ways to have your money grow exponentially is by having one or more investment accounts that compound. Most wealthy people have a number of long-term accounts that facilitate compound interest. No wonder Einstein called compound interest the eighth wonder of the world!

With compound interest, your money works diligently for you. Because it continually feeds your profit upon itself it grows at a substantially faster rate than with simple interest. Compound interest simply pays you interest on your principal; then, when it is time to pay interest again, you’re paid interest on your principal and the previous interest that you earned.

There are three persons; Coolieman, Whiteman, and Blackman. Each one has money to invest. Coolieman has $45,000. Whiteman and Blackman each have $25,000 to invest. Coolieman places his money into a 20-year investment which pays 12% simple interest annually. Whiteman and Blackman also put their money into a 20-year investment which pays 12% annual interest. However, theirs’ is compounded interest, with Whiteman’s compounding yearly and Blackman’s investment compounding quarterly.

After 20 years, here’s what their accounts would look like:

• The total value of Coolieman’s investment has grown to $153,000.00 (principal and interest).

• The total value of Whiteman’s investment is $241,157.33.

• The total value of Blackman’s account has become $266,022.25

• Additionally, if Blackman made $12,000 (that’s putting aside just $1,000 per month) additional deposits every year during the 20-year period, his balance would increase to $1,259,033.99!

$1.2m in 20yrs in Jamaica is as some would say – foul feed’n. However, a starting principal of $60,000 with yearly additions of 48,000 ($4000 a month) will give you $4,452,316.89 after 20yrs. Note this is just one form of investment you will have in your portfolio.

Most of the accounts I mentioned in the previous post facilitate compound interest, however not all have attractive rates. I highly recommend starting one as soon as possible and leave it until retirement! DON’T DISMISS IT, YOU CAN DO IT!

Blessings!

 Andre P. Llewellyn

_______________________________________________________
Ethnic oriented references made in this document are not racially motivated but reflect Jamaican colloquial expression.