The Power of Compounding!

When I attend personal finance seminars, the speaker was usually asked by the audience: "When is the best time to invest?" which I usually heard being answered: "The best time to invest was YESTERDAY. The next best time is TODAY."

If you want to become a millionaire, then you need to first delay your gratification to save money for you to take advantage of the power of compounding.

The Power of Compounding

Just like a tree that takes time in order to bear fruits, your wealth also takes time in order to grow. Having said that, the best thing that you can do is to start as early as you can.

In the example above, option A is “sacrifice now and enjoy later” which is DELAY GRATIFICATION. Option B is “enjoy now and sacrifice later” which is INSTANT GRATIFICATION. 

Given the same rate of interest, you would notice that for option A, a person who invested 35,000 per year at age 25 until age 30, would have 3,436,870.63 when he turned 50 years old. This is higher than option B, who started investing the same amount 5 years later at the age of 31 and continued investing the same amount for 20 years until the age of 50.

Just like contests where we could win prizes, delaying gratification has also a prize at stake and that is a great future for yourself and your family. 

In contests, you’re a potential winner but in delaying gratification, you’re a sure winner!It’s perfectly okay to live life to the fullest, but I believe recklessly spending most of one’s money for instant gratification to “live life to the fullest” is foolish. It’s common to hear those that are for instant gratification say that we never know when we will die. 

Below is my TV guesting at ANC 'On The Money' talking about the Power of Compounding