Friday, July 3, 2009

The Power of Compounding Interest

Compounding interest is a powerful earner, and that's why the banks use it all the time, especially on home mortgages. I know here in Australia banks calculate interest on the daily balance of a mortgage, and the total for the month is added to your account each month. That is why a fortnightly or even weekly payment can make a huge difference to the time it takes to pay off your loan.

Now, what if the shoe was on the other foot, and you were in a position to earn compounding interest? With GNI you can! Not daily, but definitely weekly, and believe me, it makes a huge difference to your investment.

Let me give you an example, using my GNI account deposit. These figures updated 20/07/09.

My initial deposit was $1434.00, eight weeks ago.
After 7 days I received $86.04 interest, or 6%
Had I not chosen to compound, that would be the same amount every week, earning me a total of $602.28 over the last 7 weeks. Not too shabby!

I did choose to compound, and have done so each week, as soon as the interest payment shows in my account. Today (I love Fridays!) my interest payment was $122.09, an increase of $36.05 over my first weekly payment of $86.04.
By continuing to compound each week, I will double my investment in just 13 weeks, at which time I will most likely withdraw a nice little bonus with which I can diversify my holdings.

Do hope you choose to join me on this exciting ride. Start with just $50 at GNI.
To find out what your deposit will be worth in 12 months, use this handy compound interest calculator. Remember, the yearly interest is 312%, compounding 52 times, to give 6% per week. You will be amazed at the results achieved by compounding weekly.

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