Finance With Ashish

Your first step towards financial freedom


Financial Freedom: The magic of compounding

There are many people who earns more than enough but saves nothing and there are some people who with their saving habits and investing efficiently can generate generational wealth. Yes you read it right ” Generational wealth”. With small earnings you can also create wealth. The only thing it demands are discipline and patience.

“It’s not how much money you make, but how much money you keep, how hard it works for you, and how many generations you keep it for”- Robert Kiyosaki

Now the question arises “How gonna we do it”. The answer is simple by “investing” and taking the help from the 8th wonder of the world “Compounding”. This compounding will be our ride for the whole journey towards Financial Freedom. Lets take an example if you were given a choice between taking $3 million in cash this very instant and a single penny that doubles in value every day for 31 days, which would you choose? Most of the people will go to the quick cash but if someone has read the book ” The Compound Effect” then he/she gonna take the penny route. It is hard to believe choosing the penny route will lead to greater wealth. isn’t it? Let’s take a closer look.

Let’s say you take the cold, hard cash and your friend goes the penny route.

On Day 5, your friend has 16 cents. You, however, have $3 million.

On Day 10, It’s $5.12 versus the big bucks.

After 20 full days, your friend has only $5243. You are still smiling. isn’t you?

Now the invisible magic of the compounding starts to become visible.

On Day 31, your friend will worth $10,737,418.24 that is more than 3 times your worth.

Here we can say that “Slow and steady can also wins the race”. In this race of generational wealth try to become the tortoise and proudly say that ” Give me enough time, and I will beat virtually anybody, anytime, in any competition “because time is the biggest factor in the magic of compounding. Just be consistent and let the time do the compounding for you. Thus in above example the person who uses the positive nature of the compound effect appears to be an “Overnight Success” but in reality it was the result of consistency multiplied by time. The action today you will take will make you that person one day you have imagined throughout. So this new year 2024 promise yourself to learn the basics of investing by understanding different tools of investing your hard earned money

So if you want to be that “penny” friend and are willing to incorporate the habit of discipline, patience and consistency while investing then be with us in this long but beautiful journey towards Financial Freedom.

Note: In the next blog we will discuss how actually the “Compounding works”.


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