Most people are blindly caught in a terrible financial trap. And worst of all? They don’t even realize it!
Think about this… most people work, spend money → work, spend money → work, spend money, etc. The cycle continues over and over again, often for a lifetime.
I want you to shift your thinking. In order to do that, you need to realize that everyone is a financial trader. You, me, your mother, your best friend. Why? Well, if you’re trading time for money, you’re making the worst financial trade in the world. Anyone that works a job is trading their time for money.
The problem is, you’re caught in a trap! How many people do you know who get their paycheck and then blow most of it within the first few weeks?
Let’s be clear. You want your money to work for you. Until then, you’re going to live in a world of financial fear, uncertainty, frustration, you name it!
Good news. There is a solution. What if you could create a money machine that literally prints cash while you sleep? This strategy provides you with a lifetime income so that you can stop trading your time for money.
I’m talking about the power of compound interest, of course! To which Einstein quipped, “Compound interest is the eighth wonder of the world. He who understand it, earns it… he who doesn’t… pays it.”
OK. So, how can you put compound interest to work for you? Let’s explore how it works and why you need to harness it right away.
Let’s Put Compound Interest To The Test
I’m about to give you the most important financial information of your life. Ready? Here it is… A portion of your monthly earnings is yours to keep. You’re not going to give it up. You’re going to keep a specific portion of what you earn – no matter what!
Let me show you how it works. Let’s say we have two brothers – Tony and Peter.
Tony starts investing at 20 years old. He invests $300 per month ($3,600/year) from the time he’s 20 to the age of 40.
He earns 10% interest on his money every year. When he turns 40, Tony stops the monthly deposits, leaves what he has in his account alone, and never makes another deposit again in his life. That’s it.
So let’s be clear. Tony spent 20 years investing $300 a month into a tax-free account returning 10% annually, from the age of 20 to 40. He’s decided to leave his money untouched to mature until he turns 65.
Now, let’s look at Peter, his brother. Peter starts investing later, when he’s 40 years old. Peter does the exactly same thing as Tony. He puts away $300 a month and gets the exact same return of 10% annually. He spends 25 years of his life putting money in the system, from the age of 40 to the age of 65.
Now think about this.
The second brother, Peter, spent 25 years investing money into the markets – from 40 to 65. He invested a total of $90,000 over 25 years. Tony, meanwhile, only spent 20 years making monthly investments – from the age of 20 to 40. His total investment is only $72,000 – noticeably less than his brother!
Now, are you ready for your mind to be blown?
So, Peter, the second brother, put MORE money and MORE time into the system, but who’s actually better off at age 65? Guess what? Tony has more money at age 65, even though he invested less over a shorter period of time.
Now, the real question is… How much better off? And why?
OK. Well, we know Tony started investing earlier (age 20) and quit earlier (age 40). Because he started young, Tony accumulated a whopping $2.5 million by age 65! That’s 600% more money than his brother was able to accumulate. That’s right! Peter put in more money and more time but only received $400,000 by age 65.
How Compounding Can Change Your Life
So what does this tell us? Well, first and foremost, it’s a clear example of the power of compounding. You can see why Einstein was so impressed! Second, it’s unequivocally clear that investing your money from a young age is truly the path to financial freedom. Shrewd, steady and consistent investments literally make money while you sleep. The trick is patience and foresight.
Tony let his money work for him and mature over a 45-year period, from the age of 20 to the age of 65. Peter was too late. Even though he spent more money and invested for a longer period of time, his money was only able to mature for 25-years.
Here’s an important lesson: compounding can mean the difference between total financial freedom and having to work for the rest of your life.
I speak to a lot of businessmen and women in their 50’s or 60’s who say, “Wow, I wish I had been more sensible with my money when I was earning in my 20’s, 30’s and even 40’s.” The thing is, you don’t even need a substantial amount of money to begin investing! Any one of us can find a way to make $300 a month on the side. The real challenge lies in having the patience to invest in YOUR FUTURE. Because the truth is, a lot of people want money… and they want it NOW.
But if you can remain patient, you can grow your net worth and build a foundation for complete financial freedom. So what are you waiting for? Get started now.