![]() ![]() Investing into pensions will not only attract interest but pensions often earn more from dividend income derived from the shares held within your funds. Shares can also appreciate in value over time in addition to the dividend income.Įssentially, the more time you have to invest the more you benefit from compound growth. This is because you cannot usually access your pension until age 55 at the very earliest. Pensions are a great example of compounding in action as the rules force us to think long term. The longer the downward hill the bigger the snowball gets! I have heard compound interest described as a snowball - roll it down a snowy hill and it will build on itself to grow and grow. In the third year you earn interest on your original money plus the interest from the first two years and so on. The following year you earn interest on both your original money plus the interest from the first year. When you save, your money earns interest.
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