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How to GET RICH with POWER of COMPOUNDING
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How to GET RICH with POWER of COMPOUNDING
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Best Way To Invest in 20s:
How to Think in Your 20s:
Magic of Dividends for Financial Freedom:
Regular Income from Stocks - Dividend Investing for Beginners:
How to Invest in Index, ETF and Stocks - TUTORIAL
POWER OF COMPOUNDING in Investing:
Analysis of Top Wealth Creator Stock in India:
This video is divided into 3 parts:
First part talks about the concept of power of compounding in investing, stock market, inflation, mutual funds and in other investments.
Second part talks about why the banks, insurance agents and brokers never talk about compounding.
Third part talks about how to use the power of compounding interest to get rich, create real wealth and achieve financial freedom.
In the first part, we find out how wealth is created with the power of compounding. When we invest our money in a share at 26%, you'll be able to double your money every 3 years. So we discuss about the rule of 72, which simple tells us how fast we can double our money. So if we can double our money with compound interest at 26% rate, then we can grow our 1 lakh rupee investment to 100 crore in our lifetime.
This is why Albert Einstein calls it the 8th wonder of the world. Those who understand it, will earn it. Those who do not understand it will pay it.
If you take a loan, you go against the power of compounding and these are the people who always struggle with money throughout their lives. However, even if you do not take a loan, the force of compounding always works against you. It is because the inflation is growing at a compounding rate in India at 10%.
I know many elders who get Rs.1000 or Rs.1800 as yearly pension which at the time of leaving their jobs looked fine, as it covered all their basic money needs for a year. However today, they can't even go out and have a dinner for one time. That's how the compounding works in real life. So whether we understand the concept of compounding or not, it'll always work against us.
However, this is not enough. All the bankers and insurance agents will try to sell you a policy that's beneficial for them but not for you. For ex. One of our viewers emailed me that he came across a good guaranteed income wealth plan where he just need to invest Rs 2.4 lakhs for 6 years and then he'll get Rs.50 lakhs after 20 years. This might sound like a good idea at first, but if you just calculate the IRR (internal rate of return), more about this in future video, then you'll realize that this investment only generates 7.78% returns. Hence, this investment will not create wealth but instead, it'll make you poor because it doesn't even beat inflation.
So your affordability will go down, and as a result, your standard of living will go down due to this investment and you'll forever have to be dependent on your children or other income source after your retirement.
Similarly, when most people enter the world of stock market, they're always welcomed by brokers with some free service such as trading tips, free trading materials, free video tips on stocks to buy now and sell later, daily stock market updates etc. However, they smoothly make you a day-trader and get you stuck in the world of trading.
As a result, long-term investing like value investing or growth investing will look like a joke to these people. This is why, we shouldn't be surprised that 99% of new comers in stock market lose money because they end up doing trading and the brokers keep getting rich
So how can we use the power of compounding to our benefit?
Well, the answer is simple. If you create a portfolio of 6 stocks and invest Rs. 1 lakh in each for long-term, if 5 companies out of these 6 go bankrupt, and one company survives that grows at a rate of 20%, you'll still end up making 13% CAGR return in that period.
And if 3 companies survives and grows at 20% then you still generate a CAGR of 17%. This is the magic of compounding that value investors use to their full benefits.
Timestamp:
00:00 Intro
00:09 Where Are the Customer's Yachts?
01:08 Index
02:03 Power of Compounding
02:39 Rule of 72
03:32 Magic of Compound Interest
04:53 Common Question
06:15 Compounding in Real-Life
09:17 Why Nobody Talk About it?
09:49 (Buy Side) Banks & Insurance
11:48 (Sell Side) Stock Market Brokers
14:12 Compounding Magic (SECRET)
16:31 Real Example
17:20 Thank You
_______________________________________________________
_______________________________________________________
Best Way To Invest in 20s:
How to Think in Your 20s:
Magic of Dividends for Financial Freedom:
Regular Income from Stocks - Dividend Investing for Beginners:
How to Invest in Index, ETF and Stocks - TUTORIAL
POWER OF COMPOUNDING in Investing:
Analysis of Top Wealth Creator Stock in India:
This video is divided into 3 parts:
First part talks about the concept of power of compounding in investing, stock market, inflation, mutual funds and in other investments.
Second part talks about why the banks, insurance agents and brokers never talk about compounding.
Third part talks about how to use the power of compounding interest to get rich, create real wealth and achieve financial freedom.
In the first part, we find out how wealth is created with the power of compounding. When we invest our money in a share at 26%, you'll be able to double your money every 3 years. So we discuss about the rule of 72, which simple tells us how fast we can double our money. So if we can double our money with compound interest at 26% rate, then we can grow our 1 lakh rupee investment to 100 crore in our lifetime.
This is why Albert Einstein calls it the 8th wonder of the world. Those who understand it, will earn it. Those who do not understand it will pay it.
If you take a loan, you go against the power of compounding and these are the people who always struggle with money throughout their lives. However, even if you do not take a loan, the force of compounding always works against you. It is because the inflation is growing at a compounding rate in India at 10%.
I know many elders who get Rs.1000 or Rs.1800 as yearly pension which at the time of leaving their jobs looked fine, as it covered all their basic money needs for a year. However today, they can't even go out and have a dinner for one time. That's how the compounding works in real life. So whether we understand the concept of compounding or not, it'll always work against us.
However, this is not enough. All the bankers and insurance agents will try to sell you a policy that's beneficial for them but not for you. For ex. One of our viewers emailed me that he came across a good guaranteed income wealth plan where he just need to invest Rs 2.4 lakhs for 6 years and then he'll get Rs.50 lakhs after 20 years. This might sound like a good idea at first, but if you just calculate the IRR (internal rate of return), more about this in future video, then you'll realize that this investment only generates 7.78% returns. Hence, this investment will not create wealth but instead, it'll make you poor because it doesn't even beat inflation.
So your affordability will go down, and as a result, your standard of living will go down due to this investment and you'll forever have to be dependent on your children or other income source after your retirement.
Similarly, when most people enter the world of stock market, they're always welcomed by brokers with some free service such as trading tips, free trading materials, free video tips on stocks to buy now and sell later, daily stock market updates etc. However, they smoothly make you a day-trader and get you stuck in the world of trading.
As a result, long-term investing like value investing or growth investing will look like a joke to these people. This is why, we shouldn't be surprised that 99% of new comers in stock market lose money because they end up doing trading and the brokers keep getting rich
So how can we use the power of compounding to our benefit?
Well, the answer is simple. If you create a portfolio of 6 stocks and invest Rs. 1 lakh in each for long-term, if 5 companies out of these 6 go bankrupt, and one company survives that grows at a rate of 20%, you'll still end up making 13% CAGR return in that period.
And if 3 companies survives and grows at 20% then you still generate a CAGR of 17%. This is the magic of compounding that value investors use to their full benefits.
Timestamp:
00:00 Intro
00:09 Where Are the Customer's Yachts?
01:08 Index
02:03 Power of Compounding
02:39 Rule of 72
03:32 Magic of Compound Interest
04:53 Common Question
06:15 Compounding in Real-Life
09:17 Why Nobody Talk About it?
09:49 (Buy Side) Banks & Insurance
11:48 (Sell Side) Stock Market Brokers
14:12 Compounding Magic (SECRET)
16:31 Real Example
17:20 Thank You
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