How would you like to make money while you sleep? It sounds too good to be true, but it is possible with the power of compounding interest. In this article, we’ll explore the concept of compounding interest, how it works and how it can help you reach your financial goals.

The term “compounding interest” is not what many people are familiar with. Yet, it is something that can have a significant impact on one's savings if well implemented. 

If you want to discover a powerful way to supercharge your savings and build lasting wealth, pay attention to every word in this article as we dive into the world of “Compounding Interest”.

What is Compounding Interest?

How does it work?

What are the benefits of compounding interest?

How can you leverage compound interest to make more money today?

What is compounding interest?

Compounding interest is a way of investing, where the money earns interest on the interest it has already earned. In other words, it is the process of earning interest on existing interest. It is a powerful tool for saving money and building wealth giving you the ability to make significant returns. 

The interest rate is usually the percentage of a loan or deposit paid to the lender or investor within a year or a stipulated time. Compound interest makes it possible to earn more money on additional amounts you have invested over time.

How does compounding interest work?

To understand how it works, let’s first look at how it can be calculated. Compound interest is calculated by multiplying the original principal amount by one plus the annual interest rate raised to the number of compound periods minus one. You can also use a compounding interest calculator to calculate it.

Compound interest is calculated using the formula below:

Compound interest = total amount of principal and interest in future (or future value) minus principal amount at present (or present value)

= [P (1 + i)n] – P

= P [(1 + i)n – 1]

Where:

P = principal

i = nominal annual interest rate in percentage terms

n = number of compounding periods

A simple compounding interest example is this: Assuming you have $2,000 in a savings account that earns 5% in annual interest. In year one, you’d earn $100, giving you a new balance of $2,100. In year two, you would earn 5% on the larger balance of $2,100, which is $105. With these earnings, after two years, your balance becomes $2,205.

This highlights the power of compounding interest and proves how easy it is for low to middle-income individuals to successfully build wealth.

The benefits of compounding interest

Compounding interest is an effective strategy that can help you save and make more money. It works like a snowball, the more you invest and let it grow, the better off you will be in the future. The benefits of compounding interest are huge:

1. It helps you save more money 

You will save more because your savings will grow without you doing anything extra. And this will allow your money to keep up with inflation and other factors that might cause you to lose money for not investing it properly. 

2. It is a guaranteed way to build wealth

As your money grows, so does your wealth. The more money you have, the more opportunities you have to invest, make more money, and save more money.

It has been proven that the best way to grow wealth is by approaching it slowly and consistently, this is where compounding interest comes into play. Unlike get-rich-quick schemes, compounding interest provides incremental gains that lead to long-term riches.

Say you have $10,000 that you want to save. If you just leave it in a regular savings account, it will grow at a rate of 0.05% per year. But if you put that same $10,000 into an account that pays 12% interest, over 10 years you’ll generate $11,060 worth of interest.

Now add that to your principal (the amount you initially invested) and that brings your overall savings to $21,060. 

Now just imagine if you’re able to surplus your principal by $10,000 every year. In ten years you’d have a little over $200,000 in savings. 

3. It can boost your retirement prospects

Successful compounding allows you to achieve your goals while spending less of your own money, helping you save more for your retirement.

How to leverage the power of compounding interest for money-making

Having seen how beneficial compounding interest could be, it goes without saying that it is highly crucial to embrace it.

In Nigeria, there are not many companies offering compound interest. But I'll show you a simple platform you can join today free of charge and start earning compound interest on your savings.

Without further ado, the platform is our very own Esca. With Esca, you can generate as much passive income as you want. The Esca technology allows you to earn crypto cashback on online purchases.

You can convert your crypto cashback to your local currency in just a matter of seconds. Also, you can request to transfer them to your local bank account when you wish.

The second way to get cashback on Esca is by transacting with the Esca Point of Sale (POS) devices. Both vendors and customers benefit from the usage of our POSs.

Each time a vendor gets a sale transaction on Esca POS, he gets cashback. When a customer makes a payment with our POS, he also gets cashback. This is unbelievable, right? Well, it's a reality.

You can utilize the compounding interest magic by allowing Esca to save your cashback for you. You leave your cashback to keep accumulating, with your interest compounding until you hit your earning goal. That means your money keeps increasing over time.

You can view your earning progress and cashback balance on your free Esca account wallet. It's free to join Esca. You can follow these three steps below to get started.

STEPS

• Step 1: On escamenu.com, click the user icon to sign up.

• Step 2: Select whether you are a Foodie or a Vendor and proceed to sign up.

• Step 3: Place an order or make a sale; once your transaction is successful, you will earn free crypto cashback immediately.

It takes about 5 minutes or less to create a free Escamenu account by visiting Escamenu.com. Head over to this page and sign up now. Check out this short guide if you need more guidance to create a free Escamenu account.

Conclusion

Compounding interest is an effective way to boost your savings and make more money without doing anything. It comes with unparalleled benefits. Escamenu.com is a registered company that can help you utilize the power of compounding interest.

If you aim to attain financial freedom in the nearest future, you want to embrace this little known-secret of wealth creation.

Miracle

Miracle is an SEO Specialist at Esca. He's a Digital Marketing Professional.