{"id":3110,"date":"2015-09-16T04:00:51","date_gmt":"2015-09-16T04:00:51","guid":{"rendered":"https:\/\/raizinvest.com.au\/investors\/the-power-of-compound-returns\/"},"modified":"2024-04-04T19:10:36","modified_gmt":"2024-04-04T19:10:36","slug":"the-power-of-compound-returns","status":"publish","type":"post","link":"https:\/\/raizinvest.com.au\/investors\/blog\/the-power-of-compound-returns\/","title":{"rendered":"The Power of Compound Returns"},"content":{"rendered":"
\"image\"<\/figure>\n

\u201cCompound return is the 8<\/b>th<\/sup><\/b>\u00a0wonder of the world. He who
\nunderstands it, earns it. He who doesn\u2019t, pays it\u201d<\/b><\/p>\n

Albert Einstein wasn\u2019t known for
\ninvesting, but he got it spot on with this. Let\u2019s understand the power of
\ncompound returns, why it\u2019s important, and how you can use it.<\/p>\n

The concept of\u00a0return<\/b>\u00a0is
\nsimple; take Albert who has $1,000 in his account \u2013 If he earns a return rate
\nof 8%, he earns return of $80 ($1,000 x 8%), over one year.<\/p>\n

Now, the idea of\u00a0compound
\nreturns\u00a0<\/b>is pretty simple too, it\u2019s just earning\u00a0return<\/b>\u00a0on
\nyour return<\/b>, over time. \u00a0For example, Albert earned $80 of return in
\nyear one; in year 2 Albert earns 8% return on his $1,000,\u00a0and<\/b>, 8%
\nreturn on the $80 he earned in year one. So in year two Albert earns returns of
\n$86.40 ($1,080 x 8%), bringing his total balance to $1166.40. A modest
\nincrease, but over time this effect snowballs, and after 40 years of compound
\nreturn, Albert\u2019s $1,000 grows to nearly $22,000, that\u2019s 2200%.<\/p>\n

Why is this important to you? By
\nchoosing to invest now, you could make compound returns work for you, and help
\nyou reach your financial goals in the future.<\/p>\n

If you start investing now, and
\npatiently let your money enjoy compound return, the returns could be truly life
\nchanging:<\/p>\n

– If you\u2019re 25 and choose to
\nstart investing now, say $1,000 a year, until your 65, with a return of 8% p.a.,
\nyou could put a handy\u00a0$280,000\u00a0<\/b>towards your retirement.<\/p>\n

– \u00a0If you wait until you\u2019re
\n30 to invest, you\u2019ll put about\u00a0$186,000\u00a0<\/b>away<\/p>\n

– \u00a0And if you don\u2019t start
\ninvesting until you\u2019re 35, you\u2019ll only put\u00a0$120,000\u00a0<\/b>away.<\/p>\n

 <\/p>\n

\"graph
The earlier you start, the more time compounding has to take effect.<\/figcaption><\/figure>\n

 <\/p>\n

<\/figure>\n

With Raiz we encourage investors
\nto start small, contribute often, and commit long-term. For more information on Raiz fees, click here<\/span>.<\/a><\/p>\n

 <\/p>\n

\n

 <\/p>\n

Don\u2019t have the Raiz App?<\/h3>\n

Download it for free in the App store or the Webapp below:<\/p>\n

\n
\"download-raiz-app\"<\/a>
Click to download the Raiz app<\/a><\/figcaption><\/figure>\n

 <\/figure>\n

Important Information<\/strong><\/span><\/em><\/p>\n

The information on this website is general advice only. This means it does not take into account any person\u2019s particular investment objectives, financial situation or investment needs. If you are an investor, you should consult your licensed adviser before acting on any information contained in this article to fully understand the benefits and risk associated with the product.<\/em><\/p>\n

A Product Disclosure Statement for Raiz Invest and\/or Raiz Invest Super are available on the Raiz Invest website and App. A person must read and consider the Product Disclosure Statement in deciding whether, or not, to acquire and continue to hold interests in the product. The risks of investing in this product are fully set out in the Product Disclosure Statement and include the risks that would ordinarily apply to investing.<\/em><\/p>\n

The information may be based on assumptions or market conditions which change without notice. This could impact the accuracy of the information.<\/em><\/p>\n

Under no circumstances is the information to be used by, or presented to, a person for the purposes of deciding about investing in Raiz Invest or Raiz Invest Super.<\/em><\/p>\n

Past return performance of the Raiz products should not be relied on for making a decision to invest in a Raiz product and is not a good predictor of future performance.<\/em><\/p>\n","protected":false},"excerpt":{"rendered":"

\u201cCompound return is the 8th\u00a0wonder of the world. He who understands it, earns it. He who doesn\u2019t, pays it\u201d Albert Einstein wasn\u2019t known for investing, but he got it spot on with this. Let\u2019s understand the power of compound returns, why it\u2019s important, and how you can use it. The concept of\u00a0return\u00a0is simple; take Albert […]<\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_mi_skip_tracking":false},"categories":[1],"tags":[],"yst_prominent_words":[]}