📊 Investments: The Search for the Best Option

📊 Investments: The Search for the Best Option

Investing is essential to ensuring a more stable financial future and maximizing earned money. To achieve this, three fundamental pillars must be considered:

• Time

• Smart decisions

• Compound interest

1. The Power of Time

Time is a decisive factor in investments, as the earlier one starts, the greater the capital growth potential. If the goal is to accumulate USD 100,000 by investing in a fixed-income fund yielding 1% per month, the relationship between money and time is as follows:

If, instead of a one-time investment, regular monthly contributions are made while reinvesting all generated interest, the snowball effect will be even more pronounced. This will be the subject of our next article.

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2. Smart Decisions

Financial decisions made over a lifetime directly impact results. As financial reserves grow, the willingness to take risks also increases. However, consistency is crucial for maintaining a stable plan and avoiding extremes.

A small increase in profitability can make a significant difference. See how changing the return from 1.0% to 1.2% per month affects the time required to reach the goal:

Compound interest is the key to long-term wealth accumulation. It results from reinvesting earned interest, creating two income streams:

1. On the initially invested amount.

2. On the accumulated interest over time.

The impact of compound interest can be observed by comparing investments with and without reinvesting earnings over 10 years:

💸 3. Compound Interest: The Snowball Effect