Power of saving

Saving money consistently can seem like an impossible task, especially if you feel like you don’t have enough disposable income to make a significant difference. However, the power of compounding can turn even the smallest savings into a substantial amount over time. A little really can go a long way.

Compounding is a simple concept, but it can have a massive impact on your finances. It’s the process of earning returns on returns, which means that over time your money grows more and more. As an example, let’s say you invest R1 000 and earn 10% interest per year. In the first year, you will earn R100 in interest, which brings your total investment value to R1 100. In the second year, you will earn 10% interest on R1 100, which is R110, bringing your total to R1210. As you can see, your money is growing more and more each year, and it is all thanks to the power of compounding. Similarly, capital gains can be earned on prior years’ capital gains.