Tuesday, September 29, 2009

Knowing the power of exponential can make you rich.

Einstein said, "The most powerful force in the universe is compound interest". In order to speed up the pace of achieving financial freedom, we must understand compound interest or the power of exponential.

Imagine you have $50,000 now. By carefully planning your investment strategy, you should be able to get around 20% growth per year (say 15% capital growth + 5% dividend). 18 years later, you will see that your $50,000 will become $1 million. Wow sound easy? If you want your money to work for you, the first question is do you want to risk your money?

So do you want to use your money to buy a liability that take money from you, or do you want to use it to buy an asset that can generate money for you? The choice is yours.

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