"The most powerful force in the universe is compound interest"
This is allegedly a statement made by Albert Einstein. Many people argue if those were the exact words, but almost all agree that he said something to that effect. However, there shouldn't be an iota of doubt in anyone's mind about the truth in what is being said.
Warren Buffett and Peter Lynch, two legendary money makers, who made tons of money without making stuff, but by making deals/decisions; both of them have emphasized the power of compounding in their businesses and are reaping the benefits. It would be way too naive to say that compounding was the biggest reason of their success; however, it would be fair to say it had a crucial role to play.
Buffett owned his first stock at the age of 11, but says,
"I don't know why I wasted time before that stock…I got started late."
For quite some time I used to think this statement as plain rhetoric, but now having read a book about his investment philosophy I realise how serious he was and I have no doubt in my mind that he truly believed what he said.
Investing is a complex thing, and it involves among lot other things, the risk of losing your capital. But there are many investment vehicles (like PPF) that are safe and most of us invest in them, but generally that happens after gaining some financial wisdom but losing a considerable amount of time in the process. For all of us, all we had [have to, if you are still young :-)] to do was [is] invest early and forget.
To give an idea, 1 Lac invested at a rate of 12% for 30 years will become approximately 30 lacs. If you are lucky and could earn a 20%, that would be 2.4 crores!
If you think these numbers are high, think again. Historically, Sensex has returned more than 18% to date.
Here is a sheet that shows the results of compounding a sum of money at a certain rate for certain years. Have a look and you will realize that over a long period, how money transforms itself. The sheet contains three tabs:
1. SIP - calculations for a systematic investment plan (for fixed rate of interest)
2. Summary Amounts - compounded amounts for a principal, rate of interest, duration.
3. Summary of growth - growth of money as a factor of the principal amount.
The intensity of Buffett's love for compounding can only be matched by his hate for taxes. He considers tax to be one of the biggest holes in your pocket. Not surprisingly, he tries every trick in the book to save tax. There was a news story about him paying less tax than his secretary (in terms of %). He was taxed at 17% while his secretary paid @ 30%. http://business.timesonline.co.uk/tol/business/money/tax/article1996735.ece
He considers the money lost in tax to be a double loss because not only you lose some of your earnings, you lose the amount you could have made using it. If a company is doing well, he would prefer the company to not pay a dividend and keep growing.
Before I close this post, here is a 'nifty' tip for your compound interest calculations.
The Rule 0f 72:
The number of years you need to double your money = 72/ (rate of interest in %). For mathematically inclined, here is how/why it works. http://www.moneychimp.com/features/rule72_why.htm
Link to the excel sheet for compound interest and SIP calculations
One more important thing which makes a lot of difference is discipline and consistency. I guess falling into a habit of saving/investing could also make a lot of difference. SIPs are definitely a good way to achieve both consistency and discipline.
Absolutely, imo power of compounding is actually the power of disclipline (i.e. staying invested). My initial idea of this blog was to relate it to the power of discipline in real life. A small good habbit over a period of years may become a formidable skill/core competency/usp.
Hi !.
You re, I guess , perhaps very interested to know how one can collect a huge starting capital .
There is no initial capital needed You may begin to get income with as small sum of money as 20-100 dollars.
AimTrust is what you need
The company represents an offshore structure with advanced asset management technologies in production and delivery of pipes for oil and gas.
It is based in Panama with structures everywhere: In USA, Canada, Cyprus.
Do you want to become an affluent person?
That`s your chance That`s what you wish in the long run!
I`m happy and lucky, I began to take up income with the help of this company,
and I invite you to do the same. It`s all about how to select a proper partner utilizes your funds in a right way - that`s it!.
I make 2G daily, and my first investment was 500 dollars only!
It`s easy to join , just click this link http://xujodupuhe.lookseekpages.com/xujyryb.html
and go! Let`s take our chance together to become rich
Good day !.
might , probably very interested to know how one can manage to receive high yields .
There is no initial capital needed You may begin to get income with as small sum of money as 20-100 dollars.
AimTrust is what you haven`t ever dreamt of such a chance to become rich
The firm represents an offshore structure with advanced asset management technologies in production and delivery of pipes for oil and gas.
It is based in Panama with offices everywhere: In USA, Canada, Cyprus.
Do you want to become really rich in short time?
That`s your choice That`s what you really need!
I`m happy and lucky, I began to get real money with the help of this company,
and I invite you to do the same. If it gets down to select a correct partner who uses your funds in a right way - that`s AimTrust!.
I make 2G daily, and what I started with was a funny sum of 500 bucks!
It`s easy to start , just click this link http://yhurerajyj.o-f.com/ygepuxa.html
and go! Let`s take our chance together to feel the smell of real money
Hello !.
You re, I guess , perhaps curious to know how one can collect a huge starting capital .
There is no initial capital needed You may begin earning with as small sum of money as 20-100 dollars.
AimTrust is what you haven`t ever dreamt of such a chance to become rich
The company represents an offshore structure with advanced asset management technologies in production and delivery of pipes for oil and gas.
Its head office is in Panama with affiliates everywhere: In USA, Canada, Cyprus.
Do you want to become really rich in short time?
That`s your chance That`s what you wish in the long run!
I`m happy and lucky, I began to take up real money with the help of this company,
and I invite you to do the same. It`s all about how to choose a correct companion utilizes your money in a right way - that`s AimTrust!.
I make 2G daily, and my first deposit was 1 grand only!
It`s easy to get involved , just click this link http://imegimotu.100megsfree5.com/uwewad.html
and lucky you`re! Let`s take this option together to feel the smell of real money
Hello!
You may probably be very curious to know how one can make real money on investments.
There is no initial capital needed.
You may commense to get income with a sum that usually is spent
for daily food, that's 20-100 dollars.
I have been participating in one project for several years,
and I'll be glad to let you know my secrets at my blog.
Please visit my pages and send me private message to get the info.
P.S. I make 1000-2000 per day now.
http://theinvestblog.com [url=http://theinvestblog.com]Online Investment Blog[/url]
hi fellas. I'm actually into shoes and I have been looking allowing for regarding that exact brand. The prices seeking the velcros were around 190 pounds on every page. But finally I found this area selling them as a remedy for half price. I in reality want these [url=http://www.shoesempire.com]prada sneakers[/url]. I will absolutely buy those. what is your opinion?
picture piano london singles night [url=http://loveepicentre.com/]navy seal singles[/url] sugar daddy dating http://loveepicentre.com/ agency black dating online
Hello. And Bye.
Glad to materialize here. Good day or night everybody!
We are not acquainted yet? It’s easy to fix,
my parents call me James F. Collins.
Generally I’m a social gmabler. for a long time I’m keen on online-casino and poker.
Not long time ago I started my own blog, where I describe my virtual adventures.
Probably, it will be interesting for you to utilize special software facilitating winnings .
Please visit my web page . http://allbestcasino.com I’ll be glad would you find time to leave your comments.
Glad to materialize here. Good day or night everybody!
We are not acquainted yet? It’s easy to fix,
my name is James F. Collins.
Generally I’m a venturesome gambler. for a long time I’m keen on online-casino and poker.
Not long time ago I started my own blog, where I describe my virtual adventures.
Probably, it will be interesting for you to find out about my progress.
Please visit my diary. http://allbestcasino.com I’ll be glad would you find time to leave your opinion.
good afternoon everyone. I'm actually into shoes and I had been searching for the sake of that meticulous model. The prices for the shoes were all over 200 dollars everwhere. But finally I bring about this site selling them for the benefit of half price. I exceptionally like these [url=http://www.shoesempire.com]gucci sneakers[/url]. I will definetly buy those. what do you think?
good evening fellas. I'm actually into shoes and I was searching for the sake of that exact make. The prices for the velcros are approximately 330 bucks on every site. But finally I found this area selling them for the benefit of half price. I exceptionally like those [url=http://www.shoesempire.com]gucci sneakers[/url]. I will absolutely purchase these. what is your opinion?
hello fellas. I'm actually into shoes and I have been searching as far as something that particular brand. The prices due to the fact that the velcros are approximately 220 dollars on every site. But completely I base this area selling them someone is concerned half price. I exceptionally want those [url=http://www.shoesempire.com]gucci sneakers[/url]. I will absolutely purchase them. what is your opinion?
Dear friends
We do not agree with this year BRITs 2010 decision.
Please go to see our little web survey
http://micropoll.com/t/KDqOnZBCWt
Lady Gaga can not be better than heavy metal
Poll supported by BRIT awards 2010 sponsor femmestyle
[url=http://www.femmestyle.ch/schoenheitschirurgie/brustvergroesserung/index.html]brustvergrößerung[/url]
Pet Shop Boys surprise lucky BRITs fan with a MasterCard Priceless Gig in their living room
http://rxmeds.in/exelon/does-exelon-cause-drowsiness
[url=http://rxmeds.in/alendronate/alendronate-in-us-for-2008]what employees should know about random drug testing[/url] why do pharmacy [url=http://rxmeds.in/cyproheptadine/cyproheptadine-hcl-combination]cyproheptadine hcl combination[/url]
drugstore import http://rxmeds.in/exelon/exelon-stock
[url=http://rxmeds.in/coumadin/side-effects-of-the-drug-coumadin]eu panel backs wider use of roche cancer drugs[/url] cvs pharmacy panama city [url=http://rxmeds.in/ezetimibe/scott-grundy-ezetimibe-2008]scott grundy ezetimibe 2008[/url]
suicide after school drug and alcohol test http://rxmeds.in/aleve/aleve-and-ambien
[url=http://rxmeds.in/zanaflex/zanaflex-fibromyalgia]drug testing drug treatment clinics albuquerque[/url] cost of adhd drugs [url=http://rxmeds.in/allergic/allergic-reaction-to-cortisone-cream]allergic reaction to cortisone cream[/url] levitra model [url=http://rxmeds.in/accutane/lawn-texas-accutane-lawyer-search]lawn texas accutane lawyer search[/url]
http://www.kreenjairadio.com/board/viewtopic.php?f=2&t=33266 http://ft2garden.com/messageboards/viewtopic.php?f=2&t=172477 http://spartanmuscle.com/forum/viewtopic.php?f=2&t=178435 http://www.jedi-temple.com/forums/viewtopic.php?f=10&t=52621
http://www.yourmums.com/forum/viewtopic.php?p=36816#36816 http://www.seo-tool-reviews.info/seo-forum/viewtopic.php?p=87079#87079 http://forum.heyasshole.net/viewtopic.php?f=2&t=108821 http://www.forum.theworld2012.com/viewtopic.php?f=7&t=46781
http://www.madstef.com/hyperhidrose/forum/affiche.php?num=736&grp=163 http://www.ictbaltic.com/smf/index.php?topic=106835.new#new http://forum.knaecke-kollektief.de/viewtopic.php?f=8&t=2722
http://webhealthcentre.in/primidone/primidone-trmors
[url=http://webhealthcentre.in/health-centers/palm-beac-county-health-department]department of corrections virgina drug rehab[/url] generic drug for actos [url=http://webhealthcentre.in/triamcinolone/triamcinolone-acetonide-for-hemorrhoids]triamcinolone acetonide for hemorrhoids[/url]
mr health insurance nevada http://webhealthcentre.in/triamcinolone/triamcinolone-acetonide-offshore
[url=http://webhealthcentre.in/toprol/toprol-at-walmart]drugstore shamposs for folliculitis[/url] pharmacy compounding alberta [url=http://webhealthcentre.in/prometrium/estrasorb-and-prometrium]estrasorb and prometrium[/url]
teen alcohol and drug treatment centers delaware http://webhealthcentre.in/amiodarone/amiodarone-and-levofloxacin-drug-interaction
[url=http://webhealthcentre.in/procardia/procardia-30-xl]nicu pharmacy goals and objectives[/url] how long will drugs stay in your blood system [url=http://webhealthcentre.in/amitriptyline/dibenzyline-and-amitriptyline]dibenzyline and amitriptyline[/url] sports medicine clinic yonge shepherd dr [url=http://webhealthcentre.in/health-care]health care[/url]
http://alwayshealth.in/is-syndrome/cause-of-jacob-syndrome
[url=http://alwayshealth.in/pills/pl-pills]cheap medicine ball 50lb[/url] ainsworths homeopathic pharmacy [url=http://alwayshealth.in/general-medical/southwind-medical-center-georgia]southwind medical center georgia[/url]
pass a drug test over the counter http://alwayshealth.in/quit-smoking/smoking-south-australia
[url=http://alwayshealth.in/skin-infection]gluten intolerance traditional chinese medicine[/url] pharmacy buy thyroxine uk [url=http://alwayshealth.in/stop-smoking/pro-smoking-bans]pro smoking bans[/url]
tell me the names of the statin drugs http://alwayshealth.in/heart-rate/heart-of-the-apocalypse-unit-plan-english-online
[url=http://alwayshealth.in/pregnacy/is-having-more-bowel-movements-a-sign-of-pregnacy]drug programs in pa[/url] buy cialis dreampharmaceuticals from online [url=http://alwayshealth.in/article-syndrome/multiple-down-syndrome-children-in-same-family]multiple down syndrome children in same family[/url] impaired sexual function and drug induced disease [url=http://alwayshealth.in/man-health/journal-of-adolescent-health-herrenkohl]journal of adolescent health herrenkohl[/url]
automobile alternators as generators of electricity for wind http://automotoportal.in/smart automobile rubber mats
[url=http://automotoportal.in/scooters/folding-gas-scooters]costom volkswagen passat parts[/url] hess racing [url=http://automotoportal.in/lincolns/lincoln-minster-school]lincoln minster school[/url]
hedrick automobile columbus oh http://automotoportal.in/motor/doha-qatar-motor-vehicle-traffic-ticket
[url=http://automotoportal.in/radiator/radiator-heating]legendary auto parts[/url] automobile racing magnetic numbers [url=http://automotoportal.in/mitsubishi/mitsubishi-spacewagon-owners-handbook]mitsubishi spacewagon owners handbook[/url]
what auto expenses are tax deductible http://automotoportal.in/opel/opel-service-south-africa
[url=http://automotoportal.in/saab/saab-9000-cde-workshop-manual]location of brake fluid on 2000 volkswagen jetta[/url] auto window tints bc [url=http://automotoportal.in/romeo/alfa-romeo-159-wellingborough]alfa romeo 159 wellingborough[/url]
http://healthportalonline.in/cefdinir/onnicef-cefdinir
[url=http://healthportalonline.in/cialis/generic-viagra-caverta-cialis-edegra-kamagra-meltabs-penegra]drugs affecting young people[/url] is herpes linked to erectile dysfunction [url=http://healthportalonline.in/cetirizine/cetirizine-5mg]cetirizine 5mg[/url]
williams brothers pharmacy http://healthportalonline.in/cephalexin/complexes-of-cephalexin
[url=http://healthportalonline.in/celadrin/celadrin-joint-health]drug for rls[/url] hallucenogenic drugs [url=http://healthportalonline.in/carbohydrate/carbohydrate-active-enzyme-server]carbohydrate active enzyme server[/url]
prometheus drugs http://healthportalonline.in/candesartan
[url=http://healthportalonline.in/carafate/carafate-suspension]how many people die from drugs in one day in america[/url] drug reimbursement [url=http://healthportalonline.in/calan/calan-mai]calan mai[/url] cost of cialis atwalmart [url=http://healthportalonline.in/cefdinir/cefdinir-side-effects-red-eye]cefdinir side effects red eye[/url]
low budget italian travel guide http://atravel.in/maps_maps-for-pokemon-peral small travel trailerscasita travel
[url=http://atravel.in/vacation-packages_cheaphawaii-vacation-packages]airlines travel club[/url] good travel websites [url=http://atravel.in/airport_braintree-shuttel-to-logan-airport]braintree shuttel to logan airport[/url]
travel geography http://atravel.in/lufthansa_boeing-757-200
[url=http://atravel.in/cruises_cruises-for-cheap-htm]travel with a dui charge[/url] travel to phu bai vietnam [url=http://atravel.in/tourist_mexico-city-tourist]mexico city tourist[/url]
flight and travel details in thailand http://atravel.in/tour_george-strait-tour-stops sample excel travel expense sheet [url=http://atravel.in/tourist_tourist-atraction-in-visayas]tourist atraction in visayas[/url]
air travel missionaries http://livetravel.in/disneyland/map-of-walt-disneyland travel aid assistance
[url=http://livetravel.in/cruise/norweigian-cruise-jobs]travel group la crosse[/url] travel family vacations [url=http://livetravel.in/tours/reptile-tours-australia]reptile tours australia[/url]
book reviews of caribbean travel guide books http://livetravel.in/hotel/hotel-traube-tonbach
[url=http://livetravel.in/plane-tickets/cheap-plane-tickets-to-salt-lake-city]travel organizer bags buxton[/url] utah travel agents [url=http://livetravel.in/flight/spirit-flight]spirit flight[/url]
travel momma http://livetravel.in/tour/stevie-wonder-summer-nights-tour
[url=http://livetravel.in/map/multi-map]travel dominoes[/url] south america travel agent from spain [url=http://livetravel.in/tours/eilat-petra-tours]eilat petra tours[/url] jobs travel around the world [url=http://livetravel.in/tours/eilat-petra-tours]eilat petra tours[/url]
travel money uk [url=http://livetravel.in/flight/airline-flight-ear-infection-hearing-loss]airline flight ear infection hearing loss[/url]
aladdin travel trailer http://livetravel.in/hotel/the-benjamin-hotel-restaurant-nearby
[url=http://livetravel.in/disneyland/good-dining-near-disneyland]joan klein travel[/url] wilderness lite travel trailer [url=http://livetravel.in/travel/american-express-axiom-on-line-travel]american express axiom on line travel[/url]
[url=http://livetravel.in/cruises/goodtime-2-cruises]goodtime 2 cruises[/url] travel to disneyworld [url=http://livetravel.in/flight/thunderbirds-flight-helmet]thunderbirds flight helmet[/url] worldwide travel destinations [url=http://livetravel.in/tour/bank-of-america-stadium-tour]bank of america stadium tour[/url]
christmas travel expectations [url=http://livetravel.in/plane-tickets/small-plane-tickets]small plane tickets[/url]
adult film accidents http://pornrapidshare.in/pre-teen/naked-teen-waking-up
[url=http://pornrapidshare.in/teen-school/best-black-teen-pussy-vid]hentai video world[/url] adult vidoe clips [url=http://pornrapidshare.in/virgin/free-nude-virgin-thumb-galleries]free nude virgin thumb galleries[/url]
free real young porn videos http://pornrapidshare.in/teens-top/research-on-substance-abuse-teens
[url=http://pornrapidshare.in/toon/xxx-toon-video]adult babies and nursing[/url] lesbian hunter dildo fuvking [url=http://pornrapidshare.in/xxx-girls/hazell-keeley-xxx-thumbs]hazell keeley xxx thumbs[/url]
time tramp adult game http://pornrapidshare.in/teen-chat/old-men-fuck-teen
[url=http://pornrapidshare.in/pre-teen/black-teen-shaking-ass]hentai girl caressing pussy[/url] looking at internet porn [url=http://pornrapidshare.in/teen-model/dash-teen-nude]dash teen nude[/url]
adult carttons http://pornrapidshare.in/tv-xxx/scandinavian-hardcore-xxx
[url=http://pornrapidshare.in/teen-usa/nude-beach-teen-girls-pictures]sexy mylar balloon videos[/url] forced teen anal [url=http://pornrapidshare.in/tit/tit-pull]tit pull[/url]
cheap std mobile tariff in india http://www.orderphonetoday.com/d30-dual-band-dual-card-with-dvb-t-tv-function--item69.html mobile sites yellow pages white pages [url=http://www.orderphonetoday.com/tv6208-quad-band-dual-card-with-bluetooth--item49.html]mobile bay audobon society margo 561 504 4251[/url] mobile core media player
movie nfo sites [url=http://worldmovs.co.cc/full_version-damage/6199database/]Damage[/url] future movie trailer [url=http://worldmovs.co.cc/full_version-the-hitman/27390database/]The Hitman[/url]
movie civil war [url=http://full-length-movies.com/dvd-quality-movie-soldados-fantasma/12120database/]Soldados Fantasma[/url] big sausage 2 the movie [url=http://worldmovs.co.cc/full_version-rock-monster/8576database/]Rock Monster[/url]
twink and daddy bear xxx movie retailers [url=http://worldmovs.co.cc/full_version-la-zona-muerta/7157database/]La Zona Muerta[/url] the movie shrooms [url=http://full-length-movies.com/dvd-quality-movie-30-days-of-night/18048database/]30 Days of Night[/url]
muppet movie studebaker photos [url=http://worldmovs.co.cc/full_version-the-lost-tales---voices-in-the-dark/7306database/]The Lost Tales - Voices In The Dark[/url] movie walkout lesson plans [url=http://worldmovs.co.cc/full_version-blonde-ambition/12765database/]Blonde Ambition[/url]
moroccon traditional clothes http://www.thefashionhouse.us/barbour-sport-shoes-for-women-black--item1373.html atlas snowshoes [url=http://www.thefashionhouse.us/?action=products&product_id=1990]chanel earrings[/url] web site designerweb site designer
http://www.thefashionhouse.us/ed-hardy-tiger-boxers-for-men-black-item1402.html hippopatumus shoes [url=http://www.thefashionhouse.us/khaki-roberto-cavalli-color28.html]lauren christine mosig[/url]