“Compound return is the 8^th wonder of the world. He who understands it, earns it. He who doesn’t, pays it”

Albert Einstein wasn’t known for investing, but he got it spot on with this. Let’s understand the power of compound returns, why it’s important and how you can use it.

The concept of return is simple; take Albert who has $1,000 in his account – If he earns a return rate of 8%, he earns return of $80 ($1,000 x 8%), over one year.

Now, the idea of compound returns is pretty simple too, it’s just earning return on your return, over time.  For example, Albert earned $80 of return in year one; in year 2 Albert earns 8% return on his $1,000, and, 8% return on the $80 he earned in year one. So in year two Albert earns returns of $86.40 ($1,080 x 8%), bringing his total balance to $1166.40. A modest increase, but over time this effect snowballs, and after 40 years of compound return, Albert’s $1,000 grows to nearly $22,000, that’s 2200%.

Why is this important to you? By choosing to invest now, you could make compound returns work for you, and help you reach your financial goals in the future.

If you start investing now, and patiently let your money enjoy compound return, the returns could be truly life changing:

- If you’re 25 and choose to start investing now, say $1,000 a year, until your 65, at in return rate of 8%, you could put a handy $280,000towards your retirement.

-  If you wait until you’re 30 to invest, you’ll put about $186,000 away

-  And if you don’t start investing until you’re 35, you’ll only put $120,000 away.

With Raiz we encourage investors to start small, contribute often, and commit long-term.

Don’t put it off until tomorrow, sign up at https://www.Raizinvest.com.au today!