THE POWER OF COMPOUNDING

It is very easy for those invested in the stock market to get complacent when it comes to monitoring their portfolio, especially 401Ks, IRAs and Mutual Funds. When our portfolio starts to take a dive, we figure that it will eventually turn around. Many people feel the professionals must know more than them, so they don't pay much attention to their investments. It can also just be too depressing to look closely at your portfolio, so we choose to forget about it for a while. This is a huge mistake and can cost you a substantial amount of money over the long haul. If you spend just a little time each week looking at your portfolio, you can recover this lost income.

Let's just say that by paying a little closer attention to your portfolio that you are able to get an extra 1.5% return. At first glance you might say, "big deal, I'll keep my blinders on". In fact, this small percentage increase can return a lot more money than you are probably thinking.

Here is an example of how much more money you can bring home, just by monitoring your more closely. If you start with $100,000 and your compound rate of return is 6.5%, you will have $352,365 at the end of 20 years.

Now take that same $100,000 and use 8% compound rate of return, which is just a 1.5% difference from the example above. You now will have $466,096 at the end of the same 20 years. This is almost $114,000 of additional cash in your hands by just paying a little more attention to your portfolio. Now imagine what this figure would be if you could increase your return 2, 3 or even 5 percent.

This is the power of compounding. A compounding rate of return can work magic for you and it doesn't take that much of a percentage change to make a huge difference. All you need to do is take a little extra time each week and don't be afraid to make changes. The one who cares the most about your financial future is YOU.
Control Your Success!