The Power of Compound Interest

Starting to save early and on a regular basis can have a positive effect on your financial stability. When you reinvest interest earned on your savings, you compound your interest because you earn interest on the interest. And with an account in the NC 529 Plan, your earnings are free from federal and North Carolina income taxes when used to pay for Qualified Higher Education Expenses.

Earnings on funds offered in the NC 529 Plan are reinvested back in the funds and reflected in the net asset value (NAV) of the funds available. This method is equivalent to paying dividends. While not visible as dividends on individual accounts, the result is the same. Reinvesting and reflecting in the NAV versus providing as dividend gives the same result “to the penny” for the NC 529 Plan investor.

©2016 College Foundation, Inc.

 

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