WMG Wealth Series - Part 5 - Become a Student of Wealth

By
Real Estate Agent with Dream Key Team DRE# 621972

In order to master something, you have to first become a student. In the 5th Episode of Win Make Give, Ben, Chad and Bob discuss ways that you can start to save today (even though starting 20 years ago would have been better). Kinda like when is the best time to plant a tree. The term "compound interest" was the main topic of conversation and it was mind-blowing. If you are not understanding or taking advantage of compound interest, you are missing out on making your money work for you. 

 

Compound interest is a simple formula that can add up (compound) over time. The compound interest formula is ((P*(1+i)^n) - P), where P is the principal, i is the annual interest rate, and n is the number of periods. Compound interest (or compounding interest) is interest calculated on the initial principal, which also includes all of the accumulated interest from previous periods on a deposit or loan. Thought to have originated in 17th century Italy, compound interest can be thought of as "interest on interest," and will make a sum grow at a faster rate than simple interest, which is calculated only on the principal amount. (source https://www.investopedia.com/)

 

Using the example of putting away $1,000.00 for a year with a 10% return will give you a gain of 1,200.00. The next year, your 10% would go towards the 1,120.00 not $1,000.00. Your return for that next year would be 1240.00 then the next year it would be.......(and so on). This can really add up over the years. What an incredible simple lesson to understand and master! Even if you can't comprehend or just simply don't feel like doing the math, you get a Compound Interest Calculator that will blow you mind as you play with the numbers.

 

 

Comments (2)

Joseph Doohan
Joseph Doohan - Las Vegas, NV
I offer business strategy advice for realtors

Thank you for taking the time to keep us posted and up to date. Learning compound interest is key for generating wealth! Wishing you a great day ahead! Take care.

Jun 09, 2020 08:29 AM
Catherine Ulrey
Keller Williams Capital City - Salem, OR
Equestrian and Acreage Property Specialist

Are there investments out there offering 10% return, other than real estate?  :)

Jun 09, 2020 10:54 AM
Catherine Ulrey

I am sure they can be found. I was just trying to use easy math. : ) Real Estate is one way to go for sure.

Jun 10, 2020 09:49 AM