Harnessing the Power of Compounding: Building Wealth for Generations

Consider an individual who invests $1,000 at an annual interest rate of 5%. After one year, they earn $50 in interest, bringing their total to $1,050. In the second year, they earn interest on the new total, not just the initial amount. This results in $52.50 in interest for the second year, bringing the total to $1,102.50. Over time, this compounding effect leads to significant growth.