It’s challenging to be patient in a fast-paced, immediate gratification world, but some things are worth the wait. Consider, for example, how a powerful financial reality (compound interest) can help investors accumulate a lot of assets over time to reward their patience and perseverance. Here’s how it works:
You invest $1000 at a 5% annual interest rate. You’ll have earned $50 in interest by the end of year one, making your original investment worth $1050. By simply leaving it alone and reinvesting, you’ll earn 10% on your initial $1000 investment, plus 5% on the $50 in interest earned in year one. By the end of year five, your investment will be worth...