I’ve gotten as far as buying $1000 worth of XEQT in TFSA do I just leave it for 30 years now?
In: Economics
On top of what the other commenter said, compound interest, while good, isn’t magic.
For simplicity, I use a savings account with a 5% interest rate.
So I deposit $1000 today. Next month, the bank calculates how much interest to give me. It calculates it would owe me $1000 x 5% yearly interest = $50 interest for a year. But it’s been a month, so they divide by 12 and give me $4.17. It goes into my savings account.
Next month, they do the same thing, except now I start with $1004.17. This month I get $4.18 in interest, slightly higher than last month.
This process repeats, each month giving me 5% interest on a bit more money. Eventually, after not touching it for 30 years, I will have $4,467.74. So 5% interest over 30 years made my account grow by about 4.5 times.
So what do you do now? It depends on why you invested.
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