Hello and welcome to another video
Getting rich is probably the goal that almost everyone is dreaming about, but unfortunately
its a long and tough way that not many actually achieve.
But, One of the ways to do that is to look at how rich people actually got rich and use
a similar strategy.
In fact, the strategy I am about to share with you has been given a name of the 8th
wonder of the world.
Its the most practical way to get rich.
and No, its not a scam, although that it actually sounds like one.
Because this is the strategy that Warren Buffet has used to become the second richest man
in the world.
And if you have watched his interviews, you probably have heard about it.
In fact this is one of the reasons why rich people get richer, because almost all rich
people use this strategy to invest their money.
And here in this video I will show you the strategy and how exactly it works, so if you
haven’t subscribed yet, then hit that subscribe button and the bell besides it and enjoy the
video.
When Warren buffet was asked how did he became the second richest man in the world, he simply
replied - “My wealth has come from a combination of living in America, some lucky genes,
and compound interest.”
But what is compound interest, its the strategy that most rich people use to keep getting
richer.
In order to understand compound interest, lets first understand how interest works in
the first place.
If you have watched my past videos, you probably know that saving money is a bad idea unless
you save to invest, because your money looses value overtime.
So in order prevent that and benefit the most out of your money, you should keep it somewhere
so that it keeps increasing even if you are doing nothing, in other words, you let your
money work for you!
Lets say for example, you invest a 10K dollars in the stock market and get a rate of return
of 10% annually.
That basically means, that every single year, your 10K dollars will earn you an extra 1000
dollars, not bad, right?
thats what simple interest is.
You can take that money and do whatever you want.
Now, imagine if you don’t get that money out and invest it back.
so, if this year you made 1000 bucks from your 10K dollar investment,
Next year, you are going to make 1100 dollars, why?
Because now its 10% on 11K dollars since you have invested back the money and did not withdraw
it, Now, guess what happens in 15 years, its going
to grow to almost 42K dollars.
When with a simple interest, you could only make 25K dollars
You can see the difference yourself
Compounding works when you invest for a long period of time.
So, what would happen if you keep it for another 15 years?
with a simple interest, it will grow up to 40K dollar, but with compounding, it will
increase up to 174, 494.
You can see how compounding grows your money faster over time.
And Thats just with 10K dollars.
And thats how most rich people invest their money.
Since rich people already have a lot of money, compounding simply makes them richer every
single year and thats one of the reasons why the gap between the rich and the poor increases
continuously.
If you look at warren buffet, you can clearly see that most of his wealth was acquired in
recent years.
In fact, he made his first million at the age of 30.
Even when he was 50 years old, his net worth wasn’t even close to a billion dollar.
and thats the key principle in compound interest, the longer you keep it, the faster it grows.
In other words, the earlier you start, the better it is!
And warren buffet started when he was still 14!
Now the question is!
How can this help you?
You probably have already realised this isn’t the fastest way to get rich but probably the
most practical.
Just by saving few hundred dollars every single month, you can make couple of million of dollars.
Lets just assume you are 18 years old and you invest 300$ every single month.
Guess how much that would by the time you retire?
If you simply save it, thats going to be around 170K (169200), not that much, right?
But If you invest it with compound interest at a rate of 10% for example, it would 3.5
(3,453,020.42) million dollars.
Way much more.
So, Don’t just save money, because savers are losers since your money depreciates over
time.
But rather save to invest.
A lot of people are going to say, I don’t want to wait for such a long time to make
a lot of money.
I want to make it while I am young and enjoy it.
Of course, you can do that, no one is stopping you, but instead of just keeping your savings
in a bank, why not let it grow faster?
If you want to know why you should not be leaving your money in a bank, then you should
the video that will appear in the screen
Anyways, hope this video was helpful, and if it was, then hit that subscribe.
Thanks for watching and I will see you in the next one.