Despite the common myth people don’t become successful overnight it takes consistent and purposeful effort. Body builders don’t get massive after one really good training session it takes thousands of hours. Each of which gives a hardly noticeable change, but over time every hour of training adds up. This is how you should approach your life. If you want to become successful then you should be doing something everyday that takes you further towards your goal for years on end and eventually you will get there.
It Can Work For You Or Against You
If you know the power of compound interest you can make millions but if you don’t understand how it works it can defeat you. If you have a large positive sum of money in the bank you are gaining compound interest, but if you have a negative balance then you are losing money exponentially. This is the main difference between successful and non successful people (when we talk about money). One spends away their money, gets in debt and loses even more. The other saves his money, invests it and makes even more. If you can double a penny every day for a month you will have £1,073,741,824, this is what rich people know how to do.
How You Can Harness The Power Of Compound Interest
1. Clear all debt. Whilst you have debt you are the victim of compound interest, you can never be financially secure. Before you do anything you should pay of your debt. Work out hoe much you can pay off each month, put yourself on a strict budget and stick to it. Pay of the debt with the highest interest rate first and work your way down.
2. Be tight. If you want to harness the power of compound interest then you need some money to start of with. Don’t waste your money on things that depreciate in value like cars, phones or TV’s. You may swell be throwing your money away, especially if your buying a TV. Save up some money, you’ll be earning some interest in a bank until you have enough to start investing.
3. Start investing now. The sooner you start making money the more you will make, that’s how compound interest works. The younger you start the richer you’ll be able to get, start saving and investing NOW. “Procrastination is the natural assassin of opportunity”- Burton Malkiel.
4. Invest in retirement plans. If you make annual contributions to your retirement plan of a few thousand a year from a young age then by the time you get to retirement you could have millions stored away. You could times your money by eight fold.
5. Invest in stocks. This is alright if you want to make a bit of money, it can keep you 1-2% above the inflation rate so you will be making a bit of money but unless you start of with millions then you will be making a very little amount.
The difference between the rich and the poor is not their salaries, rich people put their money to work, poor people waste it on items that depreciate in value.