A man named Albert Einstein was once asked what the most powerful force in the universe was.

He famously replied, "Compound interest" and referred to it as one of the greatest miracles known to mankind.

It is a phenomenon in which the interest earned on an investment is reinvested, leading to exponential growth in the value of the investment over time.

Despite its widespread recognition as a fundamental principle in finance, many severely underestimate its significance due to our human limitations on comprehending exponential growth.

Try this:

If you invest RM100 monthly in a portfolio with a 5% annual compounding rate, how much will you have after 30 years?

The answer will probably scare you.

You'll have RM79,726.62. Your total capital will be RM36,000 and you’ll earn RM43,726.62 in interest. This is assuming that you had ZERO initial capital and consistently invested RM100 per month.

Here’s another example:

Let's say you have an initial capital of RM5,000 but can only contribute RM75 per month, instead of RM100.

At 5% compounded annually, you'll have RM81,404.67 after 30 years - slightly higher than the previous example. Your total capital will also be lower, at RM32,000.

And another one:

Say you have RM20,000 as your initial capital but you do not contribute every month.

With the same duration and earnings as the previous examples, you'll have RM86,438.85 after 30 years - the highest figure, despite your total capital being the lowest.

The lesson?

Time and patience are your best friends when investing.

Start early.

Start now.

Do not feel discouraged if you don't have a large initial capital. Consistently contribute small sums each month/week, and you'll gradually see your portfolio grow to epic proportions.

The best case scenario is to have some initial capital combined with regular contributions.

With an initial investment of RM10,000 and a monthly contribution of RM70, you’ll have RM99,028.06 after 30 years.

Your total capital will also be slightly lower than the first example, at RM35,200.

There are numerous avenues for earning compounded interest, including fixed deposits, stock investing, and crypto staking.

We prefer a more straightforward approach by utilizing cash apps, specifically:

- TnG's GO+: 3.56% APY (Max. RM9,500)

- TnG's GOInvest: 4.88% APY (Promotional campaign ends Feb 14, base APY 3.70%)

- Versa: 4% APY (Promotional campaign ends Feb 28, base APY 3.55%)

We provided a detailed breakdown and comparison on each of these options. Click on this link for more information.

Thanks for reading till the end!

Disclaimer: I am not a financial advisor. This newsletter is based on my own analysis and research. Do not take any of it as financial advice.

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