Compound Interest: The Magic Trick That Makes You Rich

Imagine this: you put R100 into an investment that earns 10% per year. In the first year, you earn R10. The next year, you don’t just earn 10% on your original R100—you earn 10% on your new total of R110. That R11 grows to R12.10, and so on. It's an exponential curve that starts slow and then accelerates wildly. That, in a nutshell, is the power of compound interest.

The key ingredients for this "magic" to work are time and consistency.

• Time: The earlier you start, the more time your money has to grow. Starting in your 20s allows you to build a massive fortune with relatively small, consistent investments.
• Consistency: The key is to keep contributing regularly, whether it's R100 or R1,000 a month. Those consistent contributions are what feed the exponential growth.

The biggest mistake you can make is waiting. While a financial advisor can be a great help, remember that their fees can eat into your compounding returns. For many, a low-cost, automated investment in a diversified fund is the simplest and most effective way to get started.