I was lying in my bed not able to sleep, when it hit me. What if I were to save a thousand Euros a month and invest it, how much would I have in 10 years? Thats when I started calculating how much my money would grow each year, if it grew 8% each year. I have to say, it wasn't the easiest thing to count in my head at night. But the further I got, the more I realized I would be making. It came apparent to me, that the amount I made in a year would just keep on growing and growing! I came to the realization that I would have about 200 000€ by 10 years of saving and investing! Seriously? Could that be true? Not only that, but I realized that at 8% of 200 000€ would be close to 20 000€! So even if I stopped saving money and just left the investment to sit, the next year I would have 216 000€ and the next year it would be even more! BOOM mind blown! Damn was it hard to sleep that night!
That is the moment compound interest changed my life. It has only been half a year, but I'm on my path to wealth. I've been making multiple calculations of how I will, together with my better half, make a fortune just by saving what we already save and invest it wisely. For those of you who are unfamiliar with investing, 8% is easy to accomplish without previous experience in investing for example by putting your money in index funds.
Compound interest is a way under appreciated thing, I think it should be taught at school for children so that they too would be able to understand the benefit of investing their money. Especially from where I come from, there often is enough money that pretty much anyone can save money without sacrificing too much in their life. Actually I would argue that anyone here has the option. The only difference is if they know how to use money or not, which is a completely different discussion. Anyway if you still haven't read my earlier post about compound interest please read it, it will give you a better understanding how money can be made made with money: https://steemit.com/investing/@wealthy-easily/building-up-wealth-is-easy-with-compound-interest
Imagine starting out at the age of 18, investing the small amount of money you get from relatives etc. and seeing it grow and become larger eventually, by the time you are 40 and you have invested for 22 years, you will have an enormous amount of money, with just small monthly investments. Here I'd like to say that I am fortunate enough to come from a country where we don't have "poor people" as many countries imagine poor people. For us, poor people are those who get about a 1100€ per month, and students. It is more difficult of course if your country doesn't have these luxuries, but it also means that you need less to be wealthy in your country, and therefore compound interest can be even more beneficial to you.
I'd like to challenge everyone who reads this article to think about what you can accomplish with compound interest! If you get a Eureka moment, you will have understood compound interest and you will be on your way to wealth. There is no turning back once you have truly understood the beauty of becoming wealthy. I hope this article or my previous article will help you to accomplish this.
Great article - The magic of compound interest is certainly underrated. I wonder what the compound effect of writing on steem is - sure it's a lot more than 8% :)
Thanks! For now at least it is more than 8%. I suppose it will become smaller with more people entering, at least for the Steem you earn later on, but for now, it is probably more than 8% a week for active users. But I don't even know where to start to calculate that :)
Thanks mate, good advise,
Compounding interest is how the banks make a fortune from credit cards, home loans ect. My strategy for crypto trading is to return a small 8% return per investment. 3% to cover fees and 5% profit.
5% sounds small at first but considering your post, over many years it will accumulate to a large sum worthy of my retirement plans. Hard part is sticking to the plan, having the time to trade daily and hold tight even when the market is in decline.
If that is your plan, you might want to consider stock market index funds, because they have limited fees and they are less volatile than the cryptomarket. But in the cryptomarket you also have a chance to make a ton of money.
great post and information ! I totally agree that this should be taught in schools ! No one invests these days because they were never taught at a younger age growing up just how to do it , and gradually Learn more over time in higher grades ! And im one of them ! 👍👍👍✌
Thanks :) And not only are people not taught about investing, they are also taught that it is not safe. And usually compared to gambling. It actually seems that people are more willing to gamble than to invest these days, probably because of the potential payouts of gambling.
this is very true ! 👍👍👍
"Compound interest is the eighth wonder of the world. He who understands it, earns it ... he who doesn't ... pays it." - Albert Einstein
Yes, I included the quote in my last article. I really like it.