Albert Einstein is quoted as stating, "Compound interest is the eighth wonder of the world.
He who understands it, earns it...
he who doesn't...
pays it.
" Whether or not Mr.
Einstein ever uttered these words is up for debate.
I do know that there is great truth in the above statement.
Time and interest make money grow.
Compound interest is interest earned on interested.
In other words if you invested $10,000 at 5% interest, and left it there then the next year you would have $10,500 to invest.
The summary looks like this over 25 years.
YEAR Balance 1 $10,500 2 $11,025 3 $11,576 4 $12,155 5 $12,762 6 $13,400 7 $14,071 8 $14,774 9 $15,513 10 $16,288 11 $17,103 12 $17,958 13 $18,856 14 $19,799 15 $20,789 16 $21,828 17 $22,920 18 $24,066 19 $25,269 20 $26,532 21 $27,859 22 $29,252 23 $30,715 24 $32,250 25 $33,863 Now imagine what this would look like if you added an additional $10,000 per year and continued to earn compound interest.
There's something to be said about investing and staying invested.
The formula for wealth building is WEALTH = MONEY*TIME*RETURN.
That's pretty simple.
You don't have to start with $10,000 to make an impact, you just have to start.
And, all to often this is where most people get hung up.
They don't know where the extra money to save every month comes from.
You just have to ask yourself, "Was there $20 that I spent last week that I didn't need to spend?" If the answer is yes then you will have no problem saving money.
You just have to start! How to start is often times best discussed with a financial professional.
I think that this formula works best with the PAY YOURSELF FIRST PRINCIPLE where the first person that you pay on a monthly basis is yourself through pre-authorized chequing agreements into the accounts of your choice.
Forget about the mortgage, the electric, the cable, etc.
Make a cheque payable to number one first, or set up a monthly transfer, so that the money comes out of your account on the first of the month.
Then you'll never know that it's missing.
Remember that the only thing holding you back is yourself.
If you start small you will soon realize how to make the wealth formula work for you.
WEALTH=MONEY*TIME*RETURN
He who understands it, earns it...
he who doesn't...
pays it.
" Whether or not Mr.
Einstein ever uttered these words is up for debate.
I do know that there is great truth in the above statement.
Time and interest make money grow.
Compound interest is interest earned on interested.
In other words if you invested $10,000 at 5% interest, and left it there then the next year you would have $10,500 to invest.
The summary looks like this over 25 years.
YEAR Balance 1 $10,500 2 $11,025 3 $11,576 4 $12,155 5 $12,762 6 $13,400 7 $14,071 8 $14,774 9 $15,513 10 $16,288 11 $17,103 12 $17,958 13 $18,856 14 $19,799 15 $20,789 16 $21,828 17 $22,920 18 $24,066 19 $25,269 20 $26,532 21 $27,859 22 $29,252 23 $30,715 24 $32,250 25 $33,863 Now imagine what this would look like if you added an additional $10,000 per year and continued to earn compound interest.
There's something to be said about investing and staying invested.
The formula for wealth building is WEALTH = MONEY*TIME*RETURN.
That's pretty simple.
You don't have to start with $10,000 to make an impact, you just have to start.
And, all to often this is where most people get hung up.
They don't know where the extra money to save every month comes from.
You just have to ask yourself, "Was there $20 that I spent last week that I didn't need to spend?" If the answer is yes then you will have no problem saving money.
You just have to start! How to start is often times best discussed with a financial professional.
I think that this formula works best with the PAY YOURSELF FIRST PRINCIPLE where the first person that you pay on a monthly basis is yourself through pre-authorized chequing agreements into the accounts of your choice.
Forget about the mortgage, the electric, the cable, etc.
Make a cheque payable to number one first, or set up a monthly transfer, so that the money comes out of your account on the first of the month.
Then you'll never know that it's missing.
Remember that the only thing holding you back is yourself.
If you start small you will soon realize how to make the wealth formula work for you.
WEALTH=MONEY*TIME*RETURN
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