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Compounding Your Money - One of the most powerful assets you have is time. (thread)
Most investors don't understand how compounding works and how powerful it is. The math can be difficult, but I learned early in my financial career how to make it easy.
Most investors don't understand how compounding works and how powerful it is. The math can be difficult, but I learned early in my financial career how to make it easy.
And now I am going to make it easy for you.
The Rule of 72
What Is the Rule of 72? The Rule of 72 is a simple way to determine how long an investment will take to double given a fixed annual rate of interest.
The Rule of 72
What Is the Rule of 72? The Rule of 72 is a simple way to determine how long an investment will take to double given a fixed annual rate of interest.
By dividing 72 by the annual rate of return, investors obtain a rough estimate of how many years it will take for the initial investment to duplicate itself.
To simplify, if you can produce a 9% return annually, it will take you 8 years to double your money.
9 x 8 = 72
To simplify, if you can produce a 9% return annually, it will take you 8 years to double your money.
9 x 8 = 72
I am going to assume most of my followers are 30 years old or below.
Let's say you are 25 years old. If you can invest $5,000 in the $SPY today with an average return of 8%, let's see how much you can net by the time you retire.
Every 9 years we are doubling.
Let's say you are 25 years old. If you can invest $5,000 in the $SPY today with an average return of 8%, let's see how much you can net by the time you retire.
Every 9 years we are doubling.
5k to 10k. (34 yrs old) 10k to 20 (43) 20k to 40k (52), 40k to 80k (61k) 80k to 160k (70)
$5,000 turns into $160,000, and all you have to do is hold the $SPY. Now if we go up 9%, or 10%, those numbers skyrocket.
In the illustration above, you can see how important it is...
$5,000 turns into $160,000, and all you have to do is hold the $SPY. Now if we go up 9%, or 10%, those numbers skyrocket.
In the illustration above, you can see how important it is...
to start early. If you have 30k today and are 25, you can retire a millionaire.
NOW, if you can add 5k a year to this, you can start to do the math on how quickly you can get to 5m or 10m.
You can also apply the Rule to short term gains. If I make 10% on approx. 7 trades..
NOW, if you can add 5k a year to this, you can start to do the math on how quickly you can get to 5m or 10m.
You can also apply the Rule to short term gains. If I make 10% on approx. 7 trades..
I can double my money as opposed to trying to knock it out of the park on one trade.
I hope this lesson makes it easy for you to plan and helps you to understand how important saving/investing immediately is. For every $5k you spend on stupid shit today, you give up $160k ...
I hope this lesson makes it easy for you to plan and helps you to understand how important saving/investing immediately is. For every $5k you spend on stupid shit today, you give up $160k ...
in the future. It should make you think twice before spending foolishly.
Lastly, if you LOSE money, you kill the whole equation. Consistency is key. Small losses are ok but if you wipe out 50% on a trade, you just destroyed the model.
The lesson is, slow and steady wins.
Lastly, if you LOSE money, you kill the whole equation. Consistency is key. Small losses are ok but if you wipe out 50% on a trade, you just destroyed the model.
The lesson is, slow and steady wins.
There is a reason that Buffet and the other OG's have made so much. It's the compound. He's 89!
Extend the 5k model out, 160k to 320k (79) 320k to 640k (87)
All on 5k.
Save/Spend/Invest wisely. Enjoy your weekend.
#compounding #stocks #Bitcoin
Extend the 5k model out, 160k to 320k (79) 320k to 640k (87)
All on 5k.
Save/Spend/Invest wisely. Enjoy your weekend.
#compounding #stocks #Bitcoin
