CPF and the annoying thing about compounding
Compounded interest seems like a pipe dream because its effects only show in the final years, says CAI HAOXIANG
COMPOUNDING interest will make you rich, they tell you. A cornerstone argument of personal finance and wealth managers, compounding interest - that is, money snowballing into Warren Buffett-like billions - is a seemingly unassailable argument for the need to save, and start early, and to invest with so and so or put your money in that financial product.
Just let compounding work its magic, goes the argument.
A popular rule of thumb to determine how long it takes for your money to double is known as the rule of 72. Essentially, take an interest rate, say 7 per cent a year. Divide 72 by that number - you get around 10. That means at a 7 per cent interest rate, your money will double every 10 years.
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