5/17/2023 0 Comments Video tools 8th wonder![]() If you are able to religiously set aside $5k, not only in the first year, but every year, into the same investment, you would have: So let us stretch our numbers a little bit, and add REGULAR savings into the equation. If you put this into perspective in a building and construction sense, imagine you now have in your possession a 1 storey house in year 1, that magically becomes a 4 storey-house in 30 years’ time, by doing nothing! All this achieved, without you required to do anything at all. By 30 years, the original $5k would have grown to $40k. If you save 10%, or $5,000 this year, by doing nothing and letting your money invested somewhere earning 7% p.a. After paying your dues to the ATO, you would have about $50,000 of income per year. You would be earning the average Australian wage of $70k p.a. So let’s say you are an average Australian. The sharemarket in general has returned 8-9% per year in the last 100 years.īut how does this work for you? What does this mean to the average Australian? Let’s assume a return of 7%/year in that 7-10 rule, rather than 10% return. compounding returns, you will double your money in 7 years!Īnd also, being a conservative financial adviser that I am, let’s not take a lot of risk here. Similarly, if you are lucky enough to be able to earn 10% p.a. on your money, compounded, you will double your money in 10 years. It is the mathematical miracle whereby if you earn 7% p.a. Anyone heard about it? The real estate agents love to talk about it. It was Compound Interest who gave birth to the term the ‘7-10’ rule. I think Compound Interest is bigger than the pyramids and the Stonehenge! I will illustrate to you some points. Kane thinks it is actually the 8thWonder of the Universe! He illustrates the reasons behind his view here.ĭoes anyone know what is the ‘8 th Wonder of the World’? It is a term coined by Albert Einstein, for this thing that is called “Compound Interest”.Īs a financial planner, I think Albert didn’t give enough credit to Compound Interest, as I personally think it is the 8 thWonder of the Universe! In fact, if you listen to Platinum Adviser Kane Jiang, Compound Interest is much bigger bigger than the pyramids or Stonehenge. We're in finance land here, and in finance land, the 8th wonder of the world is Compound Interest. We're not talking about the Pyramids or the Great Barrier Reef.
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