The Power of Compound Interest

Success is a byproduct of consistent action over a long period of time.

Small investments over a period of time give excellent returns. This is how most people build wealth.

Small efforts on yourself over a long period of time help you become the person you want to be.

It’s easier to make money when you already have money. But why? Compound Interest.

Compound interest is the interest you earn on interest.

If you invest $100 this year and get 5% interest on it. You will have $105 next year. Then you will get 5% on $105. = $110.25.

Over time this number gets astronomical. To explain the power of compound interest I want to share a story with you.

Once upon a time, a king wanted to share his wealth with his son and daughter. He had an idea to test who is worthy of his throne. He gave them a simple choice. You can either take $1 million right now or I will give you a $1 today and it will double everyday it for next 30 days.

The son got very excited and took the $1 million.

The daughter thought about it. She decided to go with doubling the $1 deal. Her brother was shocked and said, how dumb are you?

The king smiled, and granted their wishes.

The son got a $1 million, he went on a spending spree.

The daughter got $1. Next day $2. 3rd day $4. $8, $16, $32 and so on.

On Day 10, she had $512, still $999,488 less than a million.

on Day 20, she had $524,88, half of a million $.

On Day 30, she had 536,870,912. $536 million. 536 times more money than her brother.

On Day 30, her brother had a heart attack when he saw the amount of money his sister had by just understanding compound interest.

This is the reason, I want you to understand the power of compound interest.

It’s very simple to understand. But hard to follow especially in the beginning, because you don’t see results in the beginning. If the daughter gave up on Day 10, she would only had $524. But she persisted and the results were exponential later on.

Most wealth is created by compound interest. Compounding is not limited to money, it works in our personal life as well.

Life and investing are very similar.

Same things happen in life, when you invest in yourself. You earn interest on everyday you show up.

When you start a new habit, you might not see much change in the first few days. But as you continue building the habit, over time the results are exponential.

When you show up every day you create a ripple effect of your work that builds a base.

The solid pattern of consistency gives you credibility.

What you repeatedly do tells others who you are. It also tells you who you are. It gives self-confidence.

Michael Phelps, the greatest olympic swimmer of all time never missed a day of training for 5 years. Not on birthdays, not on anniversary, sickness, travel or anything.

If he missed a day, he needed 2 days of training to get back to where he was.

He won 28 olympic medals (23 gold medals). He is the most decorated olympian of all time.

This is the power of compound interest in your life.

So keep showing up because I guarantee you if you put in the right effort into anything, success is about when, not if. It may take time, but it always has a return.

If you feel you want any help related to wealth, I have been offering free wealth session. This is for a limited time only. Please feel free to book a session.