The Power of Compound Understanding what the magic of compounding can do for your savings

Meet Sava Lot, she loves saving and investing her money. What's one of the most important parts of her strategy? !

Compound Interest by the Numbers Let's assume you get 5 percent annual interest on a $10,000 What is Compound Interest investment. How would that grow over 5 years? Year 1 $10,000 $500 $10,500 Principal and how does it work? Year 2 $10,500 $525 $11,025 Interest It's the process by which an initial Year 3 $11,025 $551 $11,576 Total investment (the principal) earns a Year 4 $11,576 $578 $12,154 $12,154 $12,761 percentage return (interest) over time, which is Year 5 $607 ...And if you invested $100 extra each month... then added back to your initial investment and Year 1 $10,000 $500 $11,700 compounded again.. Year 2 $11,700 $585 $13,485 This concept does wonders for Year 3 $13,485 $674 $15,359 your long-term savings Year 4 $15,359 $767 $17,326

Year 5 $17,326 $866 $19,428 ...You would have invested nearly an additional $7,000 after 5 years!

Sava's and Ben's Saving Stories ison mpar ph co Sava Gra 36 $50,4 When Sava was 25, she invested 50 60 $1,000 with a annual return of 5%. She will deposit $1,000 every year. When Sava is 50 years old she will have $52,394. Ben Waiting Sava's friend, Ben, waited until he was 35 to start saving. He will do everything the same as Sava, however it will take him until he is 60 years old to have the same amount as her. Sava Ben

With 3 simple steps, Sava's been harnessing the power of compounding

TIME: start early and you REGULAR CONTRIBUTIONS: contributing HANDS OFF: let your money can be a millionaire by 65! funds at regular intervals increases your sit and the interest do its job. savings and maintains your growing funds! You'll appreciate the results!

Compound Interest and Consumer Credit Card Debt Student Debt Balance APR Min Pay Compound interest has its Balance Interest Min Pay perks, but it also can be a $35,000 5.25% $370 $5000 15.99% $110 disadvantage when it comes to It would take her almost 25 years to pay eliminating debt. Sava has seen Sava's loan has a 10 year lifespan. She would end off her balance, not to mention it would the not so pretty side of up paying more than $9,500 in interest if she cost her $12,005.86 with an ADDITIONAL maintained this pattern. $7005.86 due to interest compound interest. Here are Saving Strategy some basic strategies that she Saving Strategy has used to beat consumer Sava doesn't want to owe almost $20,000 dollars debt! To shave time and money off of her loan, Sava for a $5,000 credit card balance. Instead of paying decides to pay an additional $500 on top of her the minimum balance, she pays $500 each month. minimum payment. Sava will be able to pay off the Continuing with this pattern, she is able to pay off debt in less than 5 years and save a little over her debt in less than 5 years and saves more than $5,200. $10,000.

Recap... Compound Interest is a tool that allows your If you have debt, always try to pay more principal amount to earn interest PLUS than the minimum balance, especially with your interest to earn interest as well. double-digit APR percentages. That could end up saving you thousands of dollars over the long haul. The earlier you start saving, then the more compound interest will work in your favor and the more you'll be saving.

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