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Headed for Equal Pie Slices 🙄
Lesson of the Day
Examples:
* Invest $10,000 in a stock index fund earning 8 percent, compounded monthly. In 9 years, it will be worth about $20,500. You’ve earned $10,500 on top of your original savings.
* Charge $10,000 to a credit card with 20% interest, paying a $200 minimum payment. It will take you a little over 9 years to pay off the card at a cost of $21,700. You’ve spent an additional $11,700 on top of your original $10k.
Compounding can make you enormously wealthy or put you in a lifetime of debt slavery. Most people consider Warren Buffett the greatest investor ever. However, on a year-by-year basis, he’s not even close to the best. Compounding over many years of life simply worked its magic. He didn’t make his first million until age 32. At age 47 he was worth $67 million. He didn’t cross the $1 billion mark until age 56. He’s worth about $150 billion now after giving away $60 billion. All this from a average annual return of 19.9%, or slightly less than what banks make off you on the average credit card. 🤔
How Rich Has Warren Buffett Been During Every Decade of His Life?
I forget the exact figures. Invest $10 at 8% compounded for 20 years – you might have enough to buy a cup of coffee.
INFLATION ….