The Law of Compounding applies to everyone… and is always working.
“The Law of Compounding interest is the
eighth wonder of the world. He who
understands it, earns it…
he who doesn’t… pays it.”
Albert Einstein called compounding the eighth wonder of the world. The Law of Compounding means earning interest on interest.
“It’s the principle of reaping huge rewards from a series of small, considered choices. Success is earned in the moment to moment decisions that in themselves make no visible difference whatsoever, but the accumulated compounding effect is profound.
The payoff of the compound effect …
In order for the law of compound effect to work, you need to be patient. Most of these daily changes won’t provide immediate results. If you want to save money so you can enjoy your retirement, consider the compounding effect of time.
See How The Law of Compounding Works
If you were offered two options of receiving $3 million or receiving one cent doubling every day in a given month, which option would you choose?
You might be tempted to go for the $3 million which would be true right up to day 29 with the one cent doubling every day reaching a balance of approximately $2.7 million.
On day 30 though you would pull right past with a balance of approximately $5.3 million.
But on day 31, did you know you would end up with a massive $10,737,418.24! That’s more than three times the $3 million offered on day one! The eighth natural wonder of the world – the law of compounding.
What stands between you and your goal is your decisions.
If you want to improve your financial life, (and your life in general) it depends on your decisions. The most important element in making good decisions is making conscious decisions. This is when you actually consider the pros and cons of your decisions before making them.
If you float through life making decisions on the fly, with little if any thought, people often find themselves wondering why they aren’t happy, healthy, wealthy or successful.
For more information on how you can use the Law of Compounding in your financial strategy, contact us at FMGWS.com.au.
SHARE THIS STORY
The Law of Compounding