If you refer to Table 1 you can see that your first end of the month interest payment for January is only $.10. Even after your first year the payout at the end of December is not significant at $1.32 per month. This gives you a meager $8.22 for the entire year, nothing that one can live on or even get rich off of.
The nice thing is that I have already calculated these numbers out and they are rather impressive. Just see the listing below to realize the power of compounding in just a 10 year span of time.
$40 Investment per paycheck = $30.27 per month interest = $1,739.49 total interest earned.
$60 Investment per paycheck = $45.41 per month interest = $2,609.23 total interest earned.
$80 Investment per paycheck = $60.55 per month interest = $3,478.98 total interest earned.
$100 Investment per paycheck = $75.68 per month interest = $4,348.72 total interest earned.
$500 Investment per paycheck = $378.41 per month interest = $21,743.62 total interest earned.
$1000 Investment per paycheck = $756.83 per month interest = $43,487.24 total interest earned.
Now just imagine what you can do with your money if you started saving when you are 18 or 20 years old and saved like this until you wanted to retire. How much would you have. Now I am going to burst the bubble just a little bit, but I have to before any of the financial geeks out there try ripping me apart for not taking into consideration one major issue with these calculations. I never took into consideration taxes. Yes, we do have to pay annual taxes on what we earn. That cuts into the interest that can compound and will significantly decrease the ending totals that I have come up with. I chose to do these calculation with out the consideration for taxes because there are ways to save and compound the interest with minimal taxation or even no taxes.You will have to eventually have to pay taxes it just is a matter of when you pay the taxes, before or after you have compounded your money + interest.
Everything that I write are the results of my own research. I strive to provide the most accurate information possible and cannot be responsible for any errors. I am not an accountant or a fiduciary. Before investing or using any of my ideas it is advisable to consult a financial professional. I am not responsible for any financial loss that might occur through the use of my ideas. Do your own research and come up with your own answers. The examples that I provide are just that, examples and are meant only for the purpose of teaching cash flow and ideas for possible investments.