Here’s an amazing article I found on the power of compounding. You can check it out in this wonderful blog “money FYI”
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On Financial Discipline: a lesson I learnt from a famous movie,
We are all looking for easy ways to accomplish useful things. Well here is a way to be a millionaire without winning a lottery.
Take $1,000, invest it at 5% and wait 141 years and 7 months. Only 73 years if you can get 10%.
If you have only $100 you can get there in a little less than 189 years at 5% and 97 years at 10%
If you are in a high tax bracket, 5% is what is left over after taxes are paid on 10%
The important lessons here:
- By having ten times more capital, you reduce the time by less than 25%
- By doubling the yield you can about halve the time
- Yield and time matter more than the principal amount.
- Be very conscious of things that reduce the yield
- Investment fund MER
- Taxes can reduce yield by almost half. Avoid taxes
- Tax-free growth is good. …
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