Introduction to Shares

Guide: Getting started

Golden Rule - Compound Interest

Albert Einstein describes it as “The most powerful force in the universe” and it is a major benefit to prudent, patient investors and is based on simple mathematics. Over time, the rate at which your capital grows will accelerate as you reinvest the proceeds.

Take the following example. In each case, during the investment period, £100 per month will be invested at 10% interest.

Age Total Amount invested Value on retirement at 65
Between 25 and 35 £12,000 £360,421
Between 35 and 65 £36,000 £223,981
Between 25 and 65 £48,000 £637,670

What this demonstrates is the significance of not takingdividends and instead reinvesting them, their are funds set up with this specific goal in mind, known as Divdiend Reinvestment Plans these are very popular with long-term low-risk investors.

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