Harness the incredible power of compounding growth
Starting to save at the age of 35 instead of 50, can mean retiring with as much as FOUR times the wealth.
There are two kinds of investors in this world, those who understand compounding and those who don't. Almost everyone who invests money claims to understand compounding, but very few do.
Compounding in its various forms is the surest way to wealth. Compounding always works. It is safe and sure and anybody can harness its fantastic power although very few ever do. Most people either fail to understand it or grossly underestimate it.
- To reap the rewards of compounding you need personal discipline and patience (at least initially).
- You need to understand how compounding works with a knowledge of the mathematics involved.
- And you need time to allow the power of compounding to really kick in and work for you.
Remember, compounding requires time.
Let's define exactly what compounding is.
In the textbook (or on Wikipedia), the term that is defined is 'Compound Interest'.
Here's the definition: Compound interest arises when interest is added to the principal, so that, from that moment on, the interest that has been added also earns interest. This addition of interest to the principal is called compounding.
Although we use the word 'interest', the idea applies equally to all forms of returns, not just those that are called interest.
The incredible power of compound growth
The compound growth table below is astounding isn't it. Who wouldn't want compound growth to work for them?
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The enormous value of time.
The single biggest thing that investors must appreciate about compounding is the enormous value of time.
You see your returns themselves start earning, and then the returns on those returns themselves start earning, the profit starts piling up at an enormous pace.
Translated into a human lifetime, it means that starting to save at the age of 35 instead of 50 can mean retiring with four times the wealth. The graph shows this clearly. If one has time to learn just one thing about investing, then it should be this.
Look at the matrix below and you will see the incredible difference an early start makes. This is exactly why when we talk with you we will asking you to make decisions to act sooner rather than later.
The graph below illustrates this very clearly.
INVESTOR B- 19 yrs old and invests $2,000 per year for just 7 years until 26yrs old. Whilst INVESTOR A- Delays investing by just 7 years and then at 26yrs old, starts investing the same $2,000 per year... BUT FOR THE NEXT 40 YEARS!
Look at the incredible difference in the return multiples on the contribution dollars.
INVESTOR A gets just 11 times multiple. INVESTOR B gets 66 times multiple!!
|INVESTOR A||INVESTOR B|
|AGE||CONTRIBUTION||YEAR END VALUE||CONTRIBUTION||YEAR END VALUE|
|LESS TOTAL INVESTED||80,000.00||14,000.00|
|TOTAL NET EARNINGS||893,703.62||930,641.05|
We're sure you would agree, when we say, it makes almost no difference to us if you start this year, next year or the year after, BUT IT WILL MAKE THE WORLD OF DIFFERENCE TO YOU.
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