Part 7/9:
Adopt a long-term perspective: Focus on investments where interest can be compounded over many periods, rather than opting for high-yield but non-reinvestable options like certain bonds or payout investments.
Choose investments with reinvestment options: For example, savings accounts that allow interest to be added back and compounded, versus investments that simply pay interest without allowing reinvestment.
Looking at the Big Picture
When assessing investment opportunities, it's important not to just focus on the interest rate but also on whether the interest earned can be compounded over time. For instance, a savings account earning 4-5% interest allows reinvestment of interest, creating a pathway for exponential growth.