Only a small fraction of people contribute to a 401k and many that do have little understanding of the investments within their portfolio. With that being said, here's a concept that many people understand...the concept of compound interest. It can work for you if you are invested in a Certificate of Deposit, Bond or even a Mutual Fund that has been performing and you reinvest interest or earnings. For many Americans the concept of compound interest works against them as in their credit card debt. When you make the minimum payment, the jeans you paid $80 for are accruing interest, but that very next month, the interest on your $80 jeans is accruing interest as well. So you are not only paying interest on the jeans, but you are paying interest on interest. Credit card debt can quickly spiral out of control not only because of lax spending but due to the compounding effect of interest against you. The stock market has been exceptionally volatile lately, which we may need to get used to. But there is a way, that you can earn 18% on your money. Pay off the balance on a credit card at 18% interest.
Some people keep their money in the bank earning 1.5%, while paying 18% or more on their credit card balances. By paying off the balance, you are effectively earning an 18% return on your money. That is a return that anyone that has been invested in this market would be ecstatic about.
Wishing You Wealth in all its Greatest Forms.
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