This Is The Power Of Compound Interest (And How It Works)

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Amazing video, A friend of mine referred me to a financial adviser sometime ago and we got to talking about investment and money. I started investing with $150k and in the first 2 months, my portfolio was reading $274, 800. Crazy right!, I decided to reinvest my profit and get more interesting. For over a year we have been working together making consistent profit just bought my second home 2 weeks ago and care for my family.

PilouBen
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I have a 3 fund portfolio consisting of 33% S&P, 33% Total stock, and 33% international. I feel a need to focus on complete growth so I went 100% stocks, but does the SP500 and TSM overlap too much to make sense holding both? However I’ve been in the red for a month now. I work hard for my money, so investing is making me a nervous sad wreck. I don’t know if I should sell everything, sit and just wait but watching my portfolio dwindle away is such an eye -sore.

Vivienedouglass
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Save $25k in your retirement by age 25, at 10% compounded, and you'll have $1.5M at retirement. Now $1.5M in 40 years won't be worth as much as it is today, but its a good start.

kevinquinn
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My last year of school, our teacher had a financial advisor come speak very briefly with us. He gave us this very same lesson. It is now 34 years later, and I am so grateful I was paying attention that day. I've now been able to set up custodial investment accounts for my 4 children (ages 8 to 17) and passed this very lesson on to them. It's not how much you save, but when you save it that matters the most. Cheers!

Mountainhippiedude
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I think George has really helped the DR brand with the younger generation. His way of explaining things with his own sense of humor and communication is good stuff

nicholasmartinez
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People who understand interest....earn it. Those who don't ...pay it.

alinatamashevich
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It’s nice that this topic gets refreshed often. I just started putting in 15% this year (I’m 23) and even though I don’t fallow Dave’s plan by the baby steps. I do enjoy listening to this show and it has saved me many times and taught me much more discipline and a better understanding in the financial aspects of life. This show is the reason why I haven’t financed a car! I understand that my 2003 camry takes me to work and to the clubs on the weekends just fine lol

cb
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Thank you for explaining, George. People who don’t read any books that explain this need to learn. Albert Einstein called compound interest “the eighth wonder of the world”. Invest now, people. As Warren Buffet said, you can’t buy more time with money.

genxx
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Which is why you should prioritize investing over prepaying your mortgage loan.

aaront
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Compounding interest plus reinvested dividends over time end up creating wealth and has for generations. The key is consistency and patience as well as discipline. You can’t achieve it if you’re reacting emotionally to market downturns and pulling your investments because either you get frightened or think you need them. This is why time in the market always beats timing the market (which is nearly impossible)

themusic
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George speaks so much truth here. My dad taught me way early in life that if I made a dollar, I should save 10 cents. This habit started in childhood, and I followed it even when I was $140, 000 in debt from student loans and was only making $15, 000 as an intern. It meant that no matter how little was coming in, there was a certain portion that I needed to always save, and I considered that sacrosanct even when I was doing the baby steps. I likened being in debt to being in an elevator on the outside of a high rise building in a crowded city. For quite some time, all I could see were other buildings and never the sky, but what made that elevator continue to creep up ascending were the twin actions of saving my portion and lobbing everything I could at the debt, month by month by month by month. I did not even realize that I was indeed rising because for so long all I saw were bricks and shadows. But an amazing thing happened. Continuing to follow the principles, I ultimately started to see some rooftops and skyline. And continuing to continue, I crested the horizon and the elevator transformed into a hot air balloon and I continued to rise ever higher. It took me 12 years to clear my student loans, back in 2006, and I was continuing to invest a set amount at the same time. Now I have a paid off house and am an everyday millionaire and there was no struggle. Just the steady application of George's principles. And the most amazing thing about it to me is that even with debt but with a plan to retire it, I felt more and more free with each passing year. That is why today is the best time to start.

andreamiller
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Ive always been a saver since I started working as a teen. I wish I knew this stuff a decade ago, but better late than never.

jer
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For those in their 20's that already started to invest in your future, you're wayyyy ahead of your peers. You are literally the 1%. Congrats.

Nessal
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It's about time, Ramsey is using/making case studies (like the money guys) and graphics! Bravo! 👏 👏

josephdigi
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wife and I started saving for retirement 30 years ago when we got married at 22 and 21 years old. had a million at age 47 and 46. now at 51 and 52 1.7 million and 100% debt free, paid off home and retired

fsufan
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I wish they wouldn’t say “compound interest” when talking about the S&P 500. It’s called “return” not interest.

brianmcg
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Love the show and love compounding interest... With that said, this example doesn't check out. Ben invests $200/mo at 10% return for 9 years, so at age 30 he has approximately $33k. Then the $33k compounds with no other contributions for 37 years at 10% return, which results in a value of approximately $1.1M, not $2.1M... Joey invests $200/mo for 37 years at 10% return, giving him a value of approximately $800k. The point still stands that early is better, but seems like a ROI closer to 12% was used in the example.

brockmoran
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A lesson on Compound Interest should be required in every school!

DannyBrooks
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This is the stuff I will be teaching my kids(i have a 3 year old and a 10 year) when they grow up. I will make sure to teach them to budget, save and invest at a young age, something i never learned when i was in my teenage years.

johnsantiago
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Start an investment account for your kids when they’re young.

enricopallazzo