Albert Einstein called compound interest “the eighth wonder of the world.”<\/p>\n
It is phenomenal to see the accelerating pace at which money is created – or paid, as the case may be – when it is left alone and allowed to compound.<\/p>\n
This tool at the Securities and Exchange Commission website helps you see\u00a0the effects of compounding: http:\/\/www.investor.gov\/tools\/calculators\/compound-interest-calculator<\/a><\/p>\n To calculate the potential future value of an investment, don’t forget to adjust the annual interest rate downward for expenses\u00a0as well as taxes,\u00a0unless the account is in a tax-deferred vehicle such as a 401(k) (though remember it\u00a0would be taxed upon withdrawal unless it is a Roth account).<\/p>\n Regardless\u00a0 of whether an investment\u00a0is in a taxable account or not, you may want to\u00a0lower the interest rate\u00a0for inflation in order to see what the investment would add up to in dollars with today’s purchasing power. For example, if you assumed the nominal return\u00a0 is 8 percent and you assume inflation is 3 percent, then the real return, which you would enter in the calculator, is 5 percent.<\/p>\n <\/p>\n<\/div>\n<\/div>\n<\/div>\n","protected":false},"excerpt":{"rendered":" Albert Einstein called compound interest “the eighth wonder of the world.” It is phenomenal to see the accelerating pace at which money is created – or paid, as the case may be – when it is left alone and allowed to compound. This tool at the Securities and Exchange Commission website helps you see\u00a0the effects… Read more<\/a><\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[],"class_list":["post-129","post","type-post","status-publish","format-standard","hentry","category-uncategorized"],"_links":{"self":[{"href":"https:\/\/fredricksonfinancial.com\/blog\/wp-json\/wp\/v2\/posts\/129","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/fredricksonfinancial.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/fredricksonfinancial.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/fredricksonfinancial.com\/blog\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/fredricksonfinancial.com\/blog\/wp-json\/wp\/v2\/comments?post=129"}],"version-history":[{"count":2,"href":"https:\/\/fredricksonfinancial.com\/blog\/wp-json\/wp\/v2\/posts\/129\/revisions"}],"predecessor-version":[{"id":131,"href":"https:\/\/fredricksonfinancial.com\/blog\/wp-json\/wp\/v2\/posts\/129\/revisions\/131"}],"wp:attachment":[{"href":"https:\/\/fredricksonfinancial.com\/blog\/wp-json\/wp\/v2\/media?parent=129"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/fredricksonfinancial.com\/blog\/wp-json\/wp\/v2\/categories?post=129"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/fredricksonfinancial.com\/blog\/wp-json\/wp\/v2\/tags?post=129"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}