Time is Money
“Controlling your time is the highest dividend money pays.” Money spent can be recovered or made up, time cannot. But time is critical in making you money.
It took time to get to the point where you are now—whether it be in your career, your fitness level, a skillset or a hobby. After all, you did not get that promotion overnight, or master a second language in a week or train for a marathon in a month.
In the same way that your personal growth takes time, so does growing your investments. Good investing isn’t necessarily about finding investments with the highest returns because high returns tend to be one-off hits that can’t be repeated.
So, what’s the path to successful investing and wealth generation? Start investing now with whatever amount you can and reinvest your earnings. This is important because of two fundamentals: 1.) compounding and 2.) time.
Money Making Money
Compounding happens when an investment’s earnings are reinvested to generate additional earnings, resulting in exponential growth. This exponential growth occurs because the investment generates earnings on both its initial investment AND the accumulated earnings—the result: Your money makes money. And the money that money makes, makes you more money.
So why should you care? Retirement seems really far away. But that’s a good thing…
That means you will be able to accumulate wealth with little capital and without compromising your lifestyle. How?—with time. Don’t believe it? Let’s look at the numbers:
Compounding Doing Its Thing
Let’s say you put $500 in an investment—That’s a fraction, of a fraction of the cost for your 5-night stay in, say, Tulum? Now, let’s say you commit to contributing $50 a month to this investment—Be real, you probably spend this much on UberEATS weekly. Lastly, let’s assume this investment is in a secure, diversified portfolio that projects 10.5% annual returns.
The result: In just one year’s time your $500 turns into $1,215.50; In 5 years it’s $4,911.89; In 10 years it’s $12,180; 20 years, $43,881.34 and 30 years, $130,520.71.
Oh, and it gets better: In just 5 more years you’re at $218,125.62. The investment almost doubles from year 30 to year 35.
You know how in the beginning years of developing a skill you feel like you’re running in place? But, once you master it, the bigtime payoff makes up for all the times you asked yourself “Is this really worth it?”
That’s kind of like long-term investing and compounding. You get consistent decent returns for many years and then BOOM you’re looking at six-figures on your earnings report, and every year your money grows by larger and larger amounts as your base keeps increasing—That’s, compounding doing its thing.
Key Takeaways
If you look at money as a vehicle to make more money, then spending it on something for temporary satisfaction does not only cost you that $500, but all the potential earnings had that $500 been invested. Then, think about if you had invested that same $500 years earlier!…tragic.
Investing is “paying for” or investing in your future self’s freedom. The ability to do whatever you want with your time. Reaching this level of autonomy though requires time—so meta…
The crux of the matter: 1.) Time cannot be recovered, so the sooner you start investing the better. 2.) Contributing to your investment regularly allows your money to grow by larger amounts each year.
With School of Whales, it takes only 3 minutes and $500 to start investing in your future self’s freedom. Electing the recurring investment option allows you to make up for lost time by compounding your returns.