Compound interest is the investment option where both the principal funds and its accruing series of interests earned are re-invested over a long period of time, say 20 calendar years.

Albert Einstein the legendary scientist called it this process the eighth wonder of the earth.

Using compound interest to invest could be achieved from so many angles and different windows of investment available to humans. Some may use this system by setting out a given amount of money and re-invest it over time while some people will keep on adding more funds into the investment over time.

To realize this dream of building an empire via compounding of interest earned the following steps most be followed:-

• You must save. Without a principal amount of money, you cannot start. Also this amount of money set out must not be compromised or diverted into something else no matter the pressure.
• Invest in a business you understand personally. Investing to may is a risky affair and will remain so for years to come. Advice will flood from left and right when you want to commence, but the home rule is start with what you know well about. Remember risk is attempting what you know nothing about.
• Choose a reasonable rate of return. You have to choose a reasonable and achievable rate of return. It could be any percentage whatsoever. It could be monthly, weekly, quarterly, semi-annually or annually. Just make a choice and stick to it. All you need to achieve is to see that the targeted income is achieved at the end of a calendar year.
• The investment must be time bound. Many people of thinking that they will forever be in business. To build an empire, you must set out when to start, how to get it done, what your end product will look like and how long it will take you. When your series of action is time bound, it makes you count your days and constantly evaluate yourself.

Book wise, investing using compound interest route as your base entails knowing and using the following:-

• PV-present value of the fund
• PMT - periodic payments
• T - time frame
• INT-interest rate per period

Lets do an example with N12,000.00 (twelve thousand naira)only.

Pv-$12,000.00, T-20years(240 months), Int-5% per month.

This investment will yield about $1.4B dollars!

Note the investor uses his only $12,000.00 alone re-invested monthly for the period of 20 years.

Lets see another usage of this data but the investor makes a periodic investment of $1,000.00 per month.

Pmt-$1,000.00, T-20 years(240months), Int-5% per month

This investment will yield about $2.4b DOLLARS!

Let us see the last but not the least approach.

Here, the $12,000.00 only is invested on yearly bases.

Pv-$12,000.00, T-20years, Int-5% per year

This investment will yield about $396million dollars in 20 years.

Does the above calculation make any meaning to you?

Do you doubt if it is possible?

It is real and has been repeatedly achieved both locally and internationally. You too can take advantage of that formula. However, do not confuse simple interest with compound interest which is common and used by many in business. Simple interest does not re-invest the accruing interest. It takes income from just the principal alone over time.