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COMPOUND INTEREST:THE 8TH WONDER OF THE WORLD

Discussion in 'Education, Learning, Books' started by Kennypaul, Apr 6, 2018.

  1. Kennypaul
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    Kennypaul Bronze Contributor Read Millionaire Fastlane I've Read UNSCRIPTED Speedway Pass

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    In chapter 14 of the Millionaire Fastlane,MJ talked about how these "financial gurus" rephrase the titles of their books/seminars as "REBUILD YOUR WEALTH","START OVER","RECOMMIT"...blah blah blah

    In my case,I've been urged by the host of this upcoming seminar titled "UNDERSTANDING THE 8TH WONDER CALLED COMPOUND INTEREST"(yeah right) to come for this "life changing" event.

    Even after declining twice,I've been told that I might miss the "opportunity of a lifetime".

    I would have jumped at this seminar if I hadn't read about the Millionaire Fastlane,because of lack of lack of knowledge and "self-education",but I'm glad I read it.This seminar is tomorrow,but I'm sure as hell not going to it.
    SIDE NOTE:According to TMF,the rich use markets for income and wealth preservation-not to create it!...I never thought I would run into this "charade",but here I am.

    Share your "financial guru" book/seminar post/pre experience.
     
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  2. MJ DeMarco
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    MJ DeMarco Raving Lunatic Staff Member Read Millionaire Fastlane I've Read UNSCRIPTED FASTLANE INSIDER Speedway Pass LEGENDARY CONTRIBUTOR Summit Attendee

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    Compound interest IS the 8th wonder of the world. It's so powerful when hooked up with a lot of time and money!

    No what the 9th wonder of the world is?

    Death-- and it's undisputed victories on planet earth.

    10 billion wins. 0 losses.
     
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  3. JScott
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    JScott Platinum Contributor FASTLANE INSIDER Speedway Pass

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    But there are about 10 billion matches currently playing out...I think we have a chance to catch up! :rofl:
     
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  4. jon.a
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    jon.a Legendary Contributor Read Millionaire Fastlane I've Read UNSCRIPTED FASTLANE INSIDER Speedway Pass LEGENDARY CONTRIBUTOR

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    It's more like 108 billion to zero. Of all mankind.
     
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  5. Kennypaul
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    Kennypaul Bronze Contributor Read Millionaire Fastlane I've Read UNSCRIPTED Speedway Pass

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    Exactly!...If we start from the beginning of time.
     
  6. garyfritz
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    garyfritz Bronze Contributor Read Millionaire Fastlane FASTLANE INSIDER

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    Compound interest IS amazingly powerful. But there's a catch: you have to have a POSITIVE rate of return. I have a brown thumb in the stock market, and over the last 38 years I have a NEGATIVE return.

    It's a gift, what can I say. Everybody's gotta be good at something. I'm VERY good at sucking at the market. That's why all of my money is in real estate...
     
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  7. GoGetter24
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    GoGetter24 Bronze Contributor Speedway Pass

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    Compound interest is junk. Back in the days of no income tax and mild deflation, perhaps yes it was legitimate. After modern tax and then inflation, it's nonsense.

    Compound business reinvestment, however, is not. That's how people like Bezos become the richest men. If your business has double digit marginal rates of return on investment, just retaining all the earnings is the best investment you can make.
     
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  8. WJK
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    WJK Silver Contributor Speedway Pass

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    Compound Interest is everything it's hyped to be. Making the seed money is only the first step. Then, if you manage it right, you can take advantage of the "Rule of 7" -- a compounding rule. That rule is that IF you manage and invest that money right, you should be able to double it every 7 years. And that is the power of Compound Interest in a nut shell.

    The true charade is our consumer culture, which robs the earners of their money before they can go to the next step.

    It's interesting that you have contempt for anything you would have learned at this event. I figure if I learn one good idea, it can be worth several times what I paid, and the time I spent sitting through the presentation. But, it's your education...
     
  9. GoGetter24
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    GoGetter24 Bronze Contributor Speedway Pass

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    Let's assume you mean 'compounding return' (interest rates are basically 0), and pick a simple example: the average return on an S&P500 index fund for the last 10 years: ~7%.

    Average inflation over that period, per year, was ~1.5%. If you believe that, after their weasely 'heuristics' etc. And lets take 30% as a crude average tax burden.

    Inflation factors in after tax. Effective rate of return: 7*(1-0.3)-1.5 = 3.4%
    Rule of 72 estimate on that for doubling the principal, if all of it is invested right at the beginning of the term, is about 21 years.

    That's not bad if you're old money. But if you've got no principal, that's not a path to getting rich via the 'fastlane'. It's more something to keep in mind if you're of the 'retire at 60' mindset.
     
  10. WJK
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    WJK Silver Contributor Speedway Pass

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    Funny, my yields from my real estate holdings are a lot better than what you've quoted... but, I'm not into the stock market... I can't help to be of the "old school" since I'm considered to be "old" and supposed to be retired!
     
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