One Hour Investor

In investing, time is the great equalizer.

The world of investing can be a confusing place. However, for an individual seeking to achieve financial goals, investing in securities is a must. Each investor has his or her own timeline, expectations and desired outcomes, but the basics of investing can provide a roadmap to financial markets. One of the most crucial aspects of creating a robust financial portfolio is the ability to understand the time value of money. For people willing to forego expenditures now to have money available in the future, the compensation for waiting comes in the form of returns. An investor with $1,000 can place the money in a certificate of deposit at 3% and in one year will accumulate $1,030.00. That person could then let the $1,030 sit for another year at 3% and, 365 days later, would find the account valued at $1,060.90. Financial planners recognize this phenomenon of reaping returns on previous returns as “compound interest.”

Investors who allow the time value of money and compounding to work over an extended period can see extraordinary returns on investments. This is true whether cash...