WEEKEND MUSINGS
*What Makes the Rich Richer and The Poor Poorer?*
There’s a reason, Albert Einstein said. “People who understand the Magic of Compounding earn it, Those who don’t, pay it.”
And there are five main reasons why most people pay it, and that’s also why the poor get poorer.
*1. Bad Financial Habits –* People work hard to earn, steal time from their family and friends. But the sad truth is, they spend most of their hard-earned income on buying liabilities that depreciate over time instead of assets that appreciate like stocks etc. Worst is, they buy things on credit cards and repay at 35 interest rates, which is quite literally a tragedy.
*2. Lottery Approach or Lack of Patience –* Most people want to build a fortune overnight. But the process of compounding starts slowly. There’s no immediate result. So, people think, why bother? And they stop investing and start withdrawing it.
*3. Poor Investment Strategy –* Because of the lack of knowledge, people are happy to get just 5% or max 10% instant returns when they can get 18% or 25% or even more boost on return in profits year on year. And even a slight difference of 2% or 5% can create a difference of multicores in the long term.
*4. Delaying it for tomorrow to make a big investment altogether –* When I ask people, have you started investing, many of them say, “Let me save some big amount and then I will invest”. Listen, you won’t need lakhs to start today. In fact, you can start with Rs 5000 monthly (or even less), and as your income grows, you can add Rs 2000 or Rs 5000 every 6 months depending upon your financial planning.
*5. Neglecting expert’s help:* If you have a broken tap, you call a plumber. If you have a broken tooth you go to the dentist. However when it comes to planning and investing finances, most people avoid taking an expert’s help even though your lifestyle, wealth, retirement income and ability to compound and multiply your wealth depend on how expertly you use your investment.
Today you have so much flexibility and the right opportunities to safely and efficiently grow your wealth. But you have to act, starting today!
And do you know why most people never act and stay stuck in bad financial situations? Because they do not believe they will ever be rich. And if you ever feel the same, it’s not your fault. It is because of your upbringing and society.
You deserve to be rich. You deserve to enjoy the finest things of life. Give yourself permission to invest and think like a rich person, and you’ll start to see the difference.
It’s time to erupt your wealth flame and turn it into an automatic, ever-growing and ever-multiplying fire of wealth
Consider this: Recently, stock markets hit a record high, i.e. Nifty 18,600.
Twenty years ago, NIFTY was at the 900 mark, and now it has zoomed to the mark 18600, which means a staggering around 1850% appreciation. That’s the astonishing power of compounding.
Over the last 20 years, the stock market has grown at a CAGR of 17.1 %, giving the greatest return than any asset class in India. Fabulous, isn’t it?
So, start today and allow yourself to be a smart, long-term investor, and you’ll start to make the unbelievable magic of compounding a reality.
You’ll be astonished to see when your investment starts to make profits, and those profits produce profits, and those profits produce more, triggering an unstoppable chain reaction.
And as this happens, you can’t help but feel a sense of pride, happiness, confidence and security about your investment, your future income and your family’s life. Isn’t it a wonderful feeling?