Compound Interest
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What is compound interest and why is it important?
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Welcome to the Australian Finance Podcast, a podcast for people who want to learn more about their personal finances and get the most from their money. This series is hosted by Kate Campbell from HowToMoney and Owen Raskovich from Rask Finance.
How does saving money provide us with choices in life?
The Australian Finance Podcast is provided for educational purposes only. The information is general in nature and does not take into account your needs, goals or objectives. What that means is the information does not apply to you specifically. So consider getting the advice of a licensed and trusted professional before acting on the information. Welcome to episode 14 of the Australian Finance Podcast, Kate.
Yes, we are going to be talking about the power of compound interest today.
Wonderful. And this comes through from a request on Twitter, I believe it was.
Yes.
Saying that we should cover compound interest in a little bit more detail.
Because it's one of the most important financial lessons.
We've kind of beat around the bush a bit with talking about compounding. Yeah. And we're going to just flesh it out a bit.
We probably will mention compound interest in every single episode and every finance article you'll see something about compound interest.
Yeah, you will because like you said, it is probably the most important thing Anyone needs to know about finance. And if you can wield its power, then ultimately you're going to set yourself up for success later on in life. Okay, so let's talk about big picture before we get into like what is compound interest, the dictionary definition. I just want to talk about why we want to save money and what it does. And for me, having thought about it this bit, we want choice in our lives.
What are the essentials for achieving financial freedom?
So choice allows us to have control. And so when we think about things like do I want to coach my kids' soccer team in 10 years or do I want to put them in after school career because I'm going to have to be working late hours or whatever? Or do I want to be able to take my family on a holiday or – Not. Do I want to be able to say, go stick it to my boss because I don't need to work here or not, right? And that's a bit flippant, but it's about having the choice and control over your own destiny. And I think that's what money does for me. And I think for most people's definition of financial freedom, that's kind of like what it is. And so when it comes to what's required to get to that position, I think obviously we talked about essentials.
One of the things being that you need to be in control of your budget.
Yeah.
Right? And everyone needs to know that they need to spend less than they earn. And what they need to do with the difference is compound.
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Chapters
8 chapters
1
What is compound interest and why is it important?
0:00–1:43
2
How does saving money provide us with choices in life?
1:43–3:09
3
What are the essentials for achieving financial freedom?
3:09–4:55
4
How does compound interest work in practice?
4:55–7:47
5
What impact does time have on investment growth?
7:47–9:35
6
How can small investments lead to significant wealth over time?
9:35–12:14
7
What role does risk play in investment returns?
12:14–14:32
8
How can understanding compound interest change your financial future?
14:32–17:53
Speakers
3 identifiedMore from Australian Finance Podcast
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Sounds like good money advice... But is it?