The Magic of Compounding Interest

Why do I invest in Vanguard Mutual funds?

1)  The low cost allows me to gain broad access to the entire stock market (I’m young so my investments are strictly in domestic stock and I have the mental capacity to accept volatility).

2)  I can seamlessly add money to my accounts (yes accounts plural… Brokerage, Roth IRA, and 401k) on a monthly or bi-weekly basis without even seeing it in some cases.

3)  MOST IMPORTANTLY I let the dividends I make on my investments reinvest in the funds which ultimately takes advantage of the Magic of Compound Interest.

The point of this post is to help you realize the benefits and exponential growth one’s portfolio can have if you take advantage of compound interest.  Mutual funds make it super easy to reinvest the returns you make and by contributing on a regular cycle you take advantage of market highs and lows.

The following link is to an article which emphasizes how compound interest can impact your retirement.  The more you save and the earlier you save, the more time you have for the interest to continually compound.  Please leave a comment if you have any further questions.

http://www.dailyfinance.com/2014/12/03/401k-catchup-might-cost-1million/

Budget smart, invest wise!

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