What Compound Interest doesn't tell you
You can't get rich If you're dead first
One of the main proverbs we are taught when we first take a look at most finance books is that of the Compound Interest, that in which little amounts over a determined period of time can make a huge return in the long run, and while this is true and It is easily applicable in many areas within not so complicated fields or If you have a respectable income (In the range of millions), for managing your personal capital It can be a real headache. Has someone ever told you that If you have X dollars over a period of 40-50 years you'll be rich by the time you retire? Well, there you have a victim of the compound interest tale. That's why in this article I will talk about the problem of expecting these kinds of results over time without taking into account one of the main factors in life, that the least expected can occur and that It can end at any time, even before you can get near to that million dollars. Let's begin:
The only thing certain
Many people fall in the category of perpetual savers all to get to that sweet retirement age where they can relax and decompress in abundance and wealth, all while cutting all the expenses they can, shortcircuiting their own level of joy and falling for schemes like investing in overly complicated financial instruments that they barely understand with the promise of a better future. However, they don't know what the future has to offer, When the day of their demise will come and even If they get to the age where they can afford anything they want, they will be too old to take full of advantage of It, with levels of energy that are at their lowest and sickness knocking at their doors.
Another thing that people don't take into account is the fact that everything can happen, and with that I mean EVERYTHING. Your children or your wife/husband can fall ill at moments where your financial situation is tight and you might have to take money from your funds to pay for their expenses; you can get fired of your work and have to survive on a limited budget and many other things that can affect whatever you pretend to save for the twilight of your life, It meaning that compound interest is not a really viable solution.
Then what can I do about It?
I'm not here to sell you anything or tell you of anything that makes money because I don't have that experience, though what I will certainly tell you is that If you really want to enjoy life while not having to look at anything you spend, you'll have to look at the fact that whatever your level of wealth is, It is just a result of what you produce minus what you consume and the fact that even If you reduce what you consume to Its lowest, at some point It will still be higher than what you produce If you don't generate Income. That's why your main focus shouldn't be in saving (As of now) though in creating wealth so you can become really financially free, either from businesses a practice that pays or any other source of revenue, reminding you that nothing is guaranteed in life.
I hope that this article could have been of use to you by providing you some insight as to why Compound Interest is not a really viable strategy If you want to create a financial freedom that you can enjoy while you're still young and have a grip of your faculties, encouraging you to increase what you make and to keep It at a healthy balance with regards to what you spend through entrepeneurship or other methods. Thank you for your support and good luck!
This makes so much sense. We only enjoy compound interest later in life when are aged already while I knew some businessmen who retired earlier with good profits and still chose to work because they feel it. They enjoy life earlier by creating wealth and being an entrepreneur and at the same time invest in later life, be wise but dont forget to take delight in things...