🪙 The power of compound interest
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Hey Ambitious,
If you want to become a millionaire...
You need to understand compound interest.
In fact, Albert Einstein once said:
"Compound interest is the eighth wonder of the world. He who understands it, earns it."
In this email, I'll show you how compound interest can multiply your wealth.
Let's dive in.
The Power of Compound Interest
Compound interest helps you earn interest on the money that you originally invested.
And the key is that you're earning interest on your interest.
Here's an example...
If I offered you:
1: One million dollars right now...
Or:
2: One penny right now and I'd double it every day for 30 days...
Which option would you choose?
Most people would go with option 1.
But if you went with option 2, you'd get over five million dollars.
Check it out:
As you can see...
If you start with a penny, and double it every day for 30 days...
You will end up with $5,368,709.12.
THIS is the power of compound interest.
It's a great example of how small amounts of money can grow into large sums over time.
The key?
The earlier you start investing...
And let compound interest do its magic...
The more powerful the effect becomes.
How to Use Compound Interest to Build Wealth
Now you know how powerful compound interest is.
But how can you "earn it" as Einstein said?
By investing money into appreciating assets.
Here are 7 assets that can earn you compound interest:
1. Real Estate
90% of all millionaires become so through owning real estate.
Real estate can provide:
Tax advantages
Passive income from rent
Profits from property appreciation
Remember, real estate is illiquid and a long-term investment.
2. Fine Art
The average ROI for fine art is 10.6% per year.
Fine art investments can provide:
Diversification
Inflation protection
Long-term value appreciation
Remember, fine art can be expensive and a long-term investment.
3. Stocks
The main source of wealth creation is...
Investing in stocks.
Stocks can provide:
High returns
Protection against inflation
Passive income from dividends
Investing in stocks is a proven way to earn compound interest.
Remember: Stock markets fluctuate and past performance doesn't guarantee future results.
Start with index funds if you're new to investing.
4. Crypto
There are over 88,200 crypto millionaires worldwide.
Crypto can provide:
High returns
Diversification
Inflation protection
Important: Crypto is highly volatile.
Never invest more than you can afford to lose.
5. HYSA
Start earning passive income by stashing your cash in a HYSA.
(Aka a high-yield savings account).
HYSAs can provide:
Liquidity
Passive income
Low (or no) fees
A high-yield savings account can earn you over 4% APY.
A 4% rate on $10,000 of cash would earn you $400.
For doing absolutely NOTHING.
6. Farmland
Farmland has averaged ~11% total annual returns from 1992 to 2023.
Farmland can provide:
Stable returns
Passive income from rent
Protection against inflation
Remember, farmland is illiquid and a long-term investment.
7. Yourself
You can't go wrong with investing in yourself.
The return you’ll get will be 10X the amount of money that you invested.
How do you invest in yourself?
Read books
Take courses
Listen to podcasts
The more you learn, the more you earn.
The Bottom Line
Compound interest is the way to wealth.
If you want to become a millionaire...
Start investing early and often.
And let compound interest work its magic.
Your bank account will thank you later,
Enjoyed these insights?
Don’t keep them to yourself.
Forward this newsletter to someone who could benefit.
Stay wealthy,
Be Wealth Operator