The reason people don’t grasp the concept of Compound interest is because they expect to see growth in the short term.
Time is like the lever when it comes to compound interest. The longer the time factor is, the greater the length of that lever. Over a few years, there may be little growth. But over a matter of decades, the growth will be exponential large.
Compound Interest is the 8th wonder of the world.
In our own minds, we think of growth as a linear progression. If we are patient, we will find that, in fact, long-term growth is actually exponential.
Exponential growth requires diligent and disciplined consistency.
Compound Interest can either be our best friend, or our worst enemy.
For example, when you borrow money, and you delay in repaying that loan, compound interest works against you and will cost you long-term wealth.
However, if you use compound interest to your advantage, with a regular and consistent savings deposit discipline, and leaving that savings intact, compound interest can bring you long term wealth.
For more information on wealth creation and wealth preservation, click Here.