The 3 Simple Rules of Building Wealth

 

Legend has it, Albert Einstein was once asked what the greatest

Working men creating global business growth

invention of all time was. His answer? Compound interest. I am often asked when and how an individual can start investing.  Those who follow these three simple rules will have the potential to improve their lives significantly.

Rule #1: For compound interest to be truly powerful, it must have the benefit of time. The more time, the better. Think of it like a snowball rolling down a hill. It starts out small and then gets bigger and bigger the longer it rolls.

For example, compare two investors who each put away $2,000 a year and earn 10% annually. The first investor starts at age 19 and puts away $2,000 per year for eight consecutive years and then holds it there. The second investor waits eight years and then invests $2,000 per year for the next 38 years. At the end of the 38 years, the first investor’s account will have grown to $941,054. The second investor’s account will be only $800,896. Because of the power of compound interest, the first investor avoids 38 years of payments and invests $60,000 less, but ends up with $140,158 more.

Small increases in rates of return make enormous differences over time. Everyone knows that a higher rate of return is better than a lower one. What most people don’t realize is that the benefit is exponential. A 15 percent rate of return is not merely three times more than a 5 percent rate of return. It can actually be anywhere from seven to seventy times more, depending on how long you invest. Start investing now.

Rule #2: You have to save money—and saving requires discipline…(read the rest of the story)

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Originally published by Utah Valley Health and Wellness

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