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Compounding Why "Magic?" If your investment earns 8% a year for five years, you don't earn 40%, but 49%. This is because you make money not only on your original investment, but also on your accumulated gains from earlier years. Let's assume that you decided to invest just $5 a week and your investment earned 8% a year. At the end of 10 years you would have saved $3,964; at the end of 20 years, $12,762. If you were able to invest $20 a week, you would have accumulated over $51,000 at the end of 20 years. That's the magic of compounding. You just systematically invest and let compounding do the rest! < PREVIOUS NEXT > #38599