ot to by taking 5% of the original $100 - $5 - plus 5% of the additional $5 – 25c). Year three, that would have grown to $115.76, year 4 to $121.55, and so on. So, what does this look like long term? After 10 We have all heard that we should start saving money as soon as possible, due to the fact that the earlier we start, the more we will have later in life. Now, while this is absolutely true, the question is, why? What is it about putting money away long term that can turn hundreds into millions? The answer is compound interest.

The math and concept behind compound interest is easy enough: it is based on stuff we learned in middle school, and, just because we are now dealing with money, does not have to become much more complicated. The process is simply this. Let us say you put $100 into a bank account (a CD, for example), paying you 5% annually. At the end of one year, you would now have $105 in the bank, so the second year you would be earning 5% on that $105. At the end of year two, therefore, you would have $110.25 (got to by taking 5% of the original $100 - $5 - plus 5% of the additional $5 – 25c). Year three, that would have grown to $115.76, year 4 to $121.55, and so on. So, what does this look like long term? After 10 y

? What is it about putting money away long term that can turn hundreds into millions? The answer is compound interest.

The math and concept behind compound interest is easy enough: it is based on stuff we learned in middle school, and, just because we are now dealing with money, does not have to become much more complicated. The process is simply this. Let us say you put $100 into a bank account (a CD, for example), paying you 5% annually. At the end of one year, you would now have $105 in the bank, so the second year you would be earning 5% on that $105. At the end of year two, therefore, you would have $110.25 (got to by taking 5% of the original $100 - $5 - plus 5% of the additional $5 – 25c). Year three, that would have grown to $115.76, year 4 to $121.55, and so on. So, what does this look like long term? After 10

e learned in middle school, and, just because we are now dealing with money, does not have to become much more complicated. The process is simply this. Let us say you put $100 into a bank account (a CD, for example), paying you 5% annually. At the end of one year, you would now have $105 in the bank, so the second year you would be earning 5% on that $105. At the end of year two, therefore, you would have $110.25 (got to by taking 5% of the original $100 - $5 - plus 5% of the additional $5 – 25c). Year three, that would have grown to $115.76, year 4 to $121.55, and so on. So, what does this look like long term? After 10 mple), paying you 5% annually. At the end of one year, you would now have $105 in the bank, so the second year you would be earning 5% on that $105. At the end of year two, therefore, you would have $110.25 (got to by taking 5% of the original $100 - $5 - plus 5% of the additional $5 – 25c). Year three, that would have grown to $115.76, year 4 to $121.55, and so on. So, what does this look like long term? After 10 ot to by taking 5% of the original $100 - $5 - plus 5% of the additional $5 – 25c). Year three, that would have grown to $115.76, year 4 to $121.55, and so on. So, what does this look like long term? After 10 years, that same $100 would be worth $162.89. After 20, the result is $265.33. After 189 years, your original $100 would be worth over $1M (finally).

Now, obviously, becoming a millionaire in 189 years time is not that exciting. What is exciting, though, is the results we can get by changing some of the numbers, because compound growth is exponential growth: it takes a little time to get going, but once it does, watch out!

So lets run the same example, but play with the figures a bit. Lets say that, instead of just investing $100, you went through your chart of expenses (if you need this, email us at mailto:info@abundancebound.com, and put “Chart of Expenses” in the title), and were able to find $1 a day - $30 per month, to invest with. And lets say that all you did was invest this in index funds. (An index fund is