Albert Einstein had once remarked,the most powerful force in this world is power of compounding.Saving is the key to wealth.The rich are not rich because they earn a lot of money; the rich are rich because they save a lot of money.
You may be skeptical — I was once skeptical, too. But over the past three years I’ve read a lot on the subject of wealth-building. Books like Stanley and Danko’s The millionaire next door make it abundantly clear that it’s not a high income that leads to wealth — though obviously a high income does not hurt — but the ability to save. Those who become wealthy do so by spending less than they earn.
If saving is the key to wealth, then time is the hand that turns the key to unlock the door. There is no reliable method to quick riches. There are, however, proven methods to get rich slowly. If you are patient, and if you are disciplined, you can produce a golden nest egg that will hatch later in life.
Now the amount of capital you start with is not nearly as important as getting started early,Procrastination is the natural assassin of opportunity.
Every year you put off investing makes your ultimate retirement goals more difficult to achieve.”The secret to getting rich slowly, he says, is the miracle of compound interest. Even modest returns can generate real wealth given enough time and dedication.
For example, if 20-year-old Ravi compounds his 10000 Rs with 20 % / annum, and if he never touches the money, that 10000 will grow to Rs 36,572,619 by the time he retires at age 65. But if she waits until she’s my age (39) to make her single investment, that 10000 would only grow to 1,144,754. Time is the primary ingredient to the magic that is compounding.
To make compounding work for you:
You may be skeptical — I was once skeptical, too. But over the past three years I’ve read a lot on the subject of wealth-building. Books like Stanley and Danko’s The millionaire next door make it abundantly clear that it’s not a high income that leads to wealth — though obviously a high income does not hurt — but the ability to save. Those who become wealthy do so by spending less than they earn.
If saving is the key to wealth, then time is the hand that turns the key to unlock the door. There is no reliable method to quick riches. There are, however, proven methods to get rich slowly. If you are patient, and if you are disciplined, you can produce a golden nest egg that will hatch later in life.
Now the amount of capital you start with is not nearly as important as getting started early,Procrastination is the natural assassin of opportunity.
Every year you put off investing makes your ultimate retirement goals more difficult to achieve.”The secret to getting rich slowly, he says, is the miracle of compound interest. Even modest returns can generate real wealth given enough time and dedication.
For example, if 20-year-old Ravi compounds his 10000 Rs with 20 % / annum, and if he never touches the money, that 10000 will grow to Rs 36,572,619 by the time he retires at age 65. But if she waits until she’s my age (39) to make her single investment, that 10000 would only grow to 1,144,754. Time is the primary ingredient to the magic that is compounding.
To make compounding work for you:
- Start early. The younger you start, the more time compounding has to work in your favor, and the wealthier you can become. The next best thing to starting early is starting now.
- Make regular investments. Don’t be haphazard. Remain disciplined, and make saving for retirement a priority. Do whatever it takes to maximize your contributions.
- Be patient. Do not touch the money. Compounding only works if you allow your investment to grow. The results will seem slow at first, but persevere. Most of the magic of compounding returns comes at the very end.
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