You’ve probably come across the term “compound interest” before. But what exactly is it, and how does it impact your wealth-building strategy?
How it works
The phrase “time is money” comes to life when considering compound interest. This powerful tool can appear minimal at first, but when coupled with time, it can tremendously impact your savings journey.
When you invest money, the financial institution will often pay you interest (an amount for holding your money at their institution). You can either spend this earned interest or keep it in your account and let it grow or compound.
How it’s calculated
Compound interest refers to the interest calculated on the principal amount you invest plus the accrued interest from previous periods. In other words, it’s interest on interest. It can create a snowball effect that can lead to substantial financial growth given enough time.
See how United Texas Credit Union can help you leverage this tool to grow your personal wealth below.
