Why You Should Set Periodic Deposits to Increase Future Value of Savings
Everyone understands the power of interest. It is the best way for a person to leverage their money into future gains. There is more to such investing than the original capital outlay, though. The best way to maximize your money is by understanding and employing periodic deposits. By learning and understanding the power of such investments, you can build a large nest egg for later in life.
What Are Periodic Deposits?
When you originally invested, you had money set aside that you wanted to increase via lending. Periodic deposits augment the initial financial outlay. The concept is that you make regular, equal deposits over an extended period. Each new monetary addition earns its own interest, thereby creating a powerful revenue-generating chain of transactions.
Setting up a periodic deposit is painless. You create a transaction with a bank. A contract is forged where they hold your money for a guaranteed period of time. You also agree to add scheduled monies over the duration of the investment. In exchange, they pay you a set interest rate. Once the investment matures, you receive a lump-sum payment that is exponentially larger than your original and subsequent payments.
Think about the idea in basic numeric terms. If you invested $5,000 with an interest rate of 4 percent annually, you would have $6,083.26 after five years and $13,329.18 after 25 years. That is a solid gain over time, but you can do better. If you can manage modest monthly periodic deposits of $80, basically the cost of cell phone service, your savings will be measurably more.
At five years, you will have accrued $11,408.90 while the total after 25 years is a whopping $54,699.19. Ten years after that, the amount would spike to $93,327.32. In terms of real dollars, compound interest dramatically accelerates in growth as the capital used for the investment grows.
Simply by withdrawing what is tantamount to a monthly bill payment, you vastly increase your earnings over time. Amazingly, the total expenditure in the scenario above would be only $600 annually plus the $5,000 for the original investment.
What Are the Benefits of Periodic Deposits?
No matter how old you are, retirement planning should always be a consideration. Few people are blessed with freedom from financial worry. The majority who aren't must come up with a strategy to guarantee that you have enough money to live after you've stopped earning a paycheck.
Periodic deposits empower you to utilize the magic of lender interest to strengthen your future revenue stream. One of the sticking points for most investment strategies is that they require constant, significant financial outlays to capitalize on earnings potential.
Periodic deposits are safe investments that regularly protected by the contract terms. Even if your bank fails, your money is not lost. And you sustain your eventual lump-sum payment by making modest, easily affordable payments. The only large expense occurs at the start, and you as the lender determine the amount, thereby guaranteeing its affordability.
With so much to gain financially and such a small amount of money required during the process, periodic deposits are one of the best and safest investment strategies in the industry.