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Compound interest.
We've all heard of it.
But why is it the 8th wonder of the world?
I'll show you.
- A THREAD -
We've all heard of it.
But why is it the 8th wonder of the world?
I'll show you.
- A THREAD -
Do you wish you could have more money without doing the work?
Do you want to retire early and never have to work again?
Your money can do that.
But you have to make it work for you.
Funny how that works...
Do you want to retire early and never have to work again?
Your money can do that.
But you have to make it work for you.
Funny how that works...
When most people think of interest, they think of debt.
This is just a testament to how much we've been programmed to think being in debt is normal.
It's not.
Instead, you can be earning interest on the money you've saved and invested.
This is just a testament to how much we've been programmed to think being in debt is normal.
It's not.
Instead, you can be earning interest on the money you've saved and invested.
The best part is that interest is calculated on the interest you've made.
Not just on the principal.
This is what's called "interest on interest"
Why should you start saving now?
Because WHEN you start saving is more important than HOW MUCH you save.
Not just on the principal.
This is what's called "interest on interest"
Why should you start saving now?
Because WHEN you start saving is more important than HOW MUCH you save.
Let's take a look at an example:
Joe, Tyler and Lisa all have investment portfolios that return 7% annually.
Their goals are similar - to retire with as much money as possible
The only difference between them is that they have different saving habits.
Joe, Tyler and Lisa all have investment portfolios that return 7% annually.
Their goals are similar - to retire with as much money as possible
The only difference between them is that they have different saving habits.
1. Joe
Joe starts investing $3,000 per year at age 18, right when he decides to go to college.
But Joe's degree hasn't gotten him a well-paying job.
And now he has other obligations in life...
So at 28 years old (10 years later), he stops with $30,000 invested in the market.
Joe starts investing $3,000 per year at age 18, right when he decides to go to college.
But Joe's degree hasn't gotten him a well-paying job.
And now he has other obligations in life...
So at 28 years old (10 years later), he stops with $30,000 invested in the market.
2. Tyler
Tyler invests the same $3,000 per year but starts at age 28.
He was a huge party animal in college.
Never saved a dime and spent it all at the bars.
He invests until he retires 30 years later (age 58).
He's contributed for 30 years and now has $90,000 in the market.
Tyler invests the same $3,000 per year but starts at age 28.
He was a huge party animal in college.
Never saved a dime and spent it all at the bars.
He invests until he retires 30 years later (age 58).
He's contributed for 30 years and now has $90,000 in the market.
3. Lisa
Lisa is the most financially savvy of the three.
She invests $3,000 starting at age 18 when she goes to college.
She continues to do so until retirement 40 years later (age 58)
She has invested for 40 years and now has $120,000 in the market.
Lisa is the most financially savvy of the three.
She invests $3,000 starting at age 18 when she goes to college.
She continues to do so until retirement 40 years later (age 58)
She has invested for 40 years and now has $120,000 in the market.
Now that we know their stories...
Let's look at how much money they all end up with at retirement (age 58)
Joe (10 years invested) ---> $47,350
Tyler (30 years invested) ---> $306,219
Lisa (40 years invested) ---> $643,828
Let's look at how much money they all end up with at retirement (age 58)
Joe (10 years invested) ---> $47,350
Tyler (30 years invested) ---> $306,219
Lisa (40 years invested) ---> $643,828
All 3 of them started with the SAME amount of money.
All 3 of them contributed the SAME amount every year.
All 3 of them have the SAME annual return.
The only difference...
Time.
Lisa's portfolio is worth more than 13x Joe's.
And more than 2x Tyler's.
All 3 of them contributed the SAME amount every year.
All 3 of them have the SAME annual return.
The only difference...
Time.
Lisa's portfolio is worth more than 13x Joe's.
And more than 2x Tyler's.
Compound interest favors those who start early.
And it pays to start now.
Even if you can only contribute a couple hundred per month.
If you just start, time will reward you.
And compound interest will make you rich.
And it pays to start now.
Even if you can only contribute a couple hundred per month.
If you just start, time will reward you.
And compound interest will make you rich.
I teach this principle in my course.
My favorite way to take advantage of the compounding effect is through dividend reinvestment.
I was fortunate to start at 17 years old.
But you can start now and still take full advantage of your time.
Learn how: https://bit.ly/dividendmoney
My favorite way to take advantage of the compounding effect is through dividend reinvestment.
I was fortunate to start at 17 years old.
But you can start now and still take full advantage of your time.
Learn how: https://bit.ly/dividendmoney
