Looking for a New Year’s resolution that is highly beneficial and relatively easy to keep? Each year, millions of people around the world make themselves lofty promises that often end up being difficult to execute by virtue of being unrealistic. Losing weight, for example, is a popular resolution, but it is too often framed with unreasonable goals such as shedding more than 10 pounds by the end of January. Such a feat of weight loss would require considerable physical activity and nutritional adjustments, thus making it more difficult.
Starting Out as a Compound Interest Investor
Getting into compound interest is a perfect New Year’s resolution for investors who prefer conservative investment strategies. The reason compounding is easy to manage is because there are many financial products that will automate the process. All you have to do is start out with an account that provides compound interest as a feature. An idea for 2021 would be something along the lines of a high yield savings account. American Express, for example, offers an annual percentage yield of 0.50% that compounds automatically for you on a monthly basis. The 0.50% APY may not sound like a lot, but you have to keep in mind that the national average in early 2021 is 0.05%, and this is because the United States Federal Reserve has slashed interest rates as part of the overall economic stimulus effort.
set a goal of making frequent cash contributions to your compound interest account
The aforementioned American Express account does not have a minimum deposit requirement. All the funds you deposit will compound on their own, which means that the interest gains will be reinvested for you, thus increasing the investing power of your account. The rest of the compound interest strategy falls upon you to make it the kind of investment that is exponential.
When you set a goal of making frequent cash contributions to your compound interest account, you are doing yourself a big favor. Let’s say you open an American Express high yield savings account in January 2021 with $100; your resolution would be to deposit $100 every month and stick to this deposit frequency with religious fervor. By New Year’s Eve 2031, your account balance will have grown to $12,048. The key aspect of the resolution is to keep up the pace of contributions no matter what happens, and it would be even better if you can increase them.