Friday, December 17, 2010

The Rich know the power of compounding

Further to my blog of “Invest for future”, take the example of the tables. Let assume investor B start the investment at age 19. For first 7 years, he put $6,000 every year at an average growth rate of 10%. (7% interest plus growth) After 7 years he stop his contribution but let the Principal continue to grow at the rate of 10%.
A second investor, A, start invest at age of 26 (age when B finished with his contribution) A continue to contribute $6,000 every year until age of 50.

The result shows that B who made the contribution early and who make contribution for 7 years only ends up with more money than A who made the contribution at a LATER TIME with 24 years!
The rich know how to use TIME and MONEY with the power of compounding to generate more wealth! That is what we always say, Start early and invest for long term.

You can view my sample portfolio of how to build stable income over years: Malaysia REIT report

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