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Power of Patience: Unleashing the Compound Effect in Investing
If I start with $100,000 and Invest $125,000 every quarter ($500,000/year) for the next 25 years and earn on average 12% rate of return, the investment value would be AT LEAST $77,832,829 with my capital contribution being $12,600,000. A $65,232,829 gain. Not too bad, ay? Thanks to compounding. (And high income, of course) At its core, the compound effect is a simple concept. It involves the snowballing of small gains over an extended period, creating a compounding effect that accelerates wealth accumulation. Patience is the key to unlocking this potential. One of the fundamental principles of investing is understanding the power of time. The longer your money is invested, the more time it has to grow. Simple... Patience in investing is not about inaction, it's about strategic, well thought out actions over an extended period. It involves resisting the temptation to chase after the latest hot deals or panic-selling during market downturns. Instead, patient investors focus on the underlying strength of their investments and the potential for long-term growth of a portfolio. Another crucial aspect of patience in investing is the ability to reinvest dividends. Cash flowing properties like apartments or rentals can provide a steady income stream, but the true power lies in reinvesting that cash. This is what leads to massive growth. Warren Buffett, one of the most successful investors of our time talks about patience and the compound effect all the time. He famously said, "The stock market is a device for transferring money from the impatient to the patient." Buffett's own investment philosophy is rooted in a long-term, patient approach that has allowed him to amass substantial wealth over decades and we must apply that to our real estate investing strategy. Not everyone is 22 anymore or YET, but compounding starts at any age. Just start. (If you want to play with some hypothetical numbers you can use https://www.nerdwallet.com/calculator/compound-interest-calculator to run some different sceniros just to get a very basic idea of compounding and it's power)
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New comment Feb 2
Power of Patience: Unleashing the Compound Effect in Investing
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The FutureFolio Network
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A group of next generation real estate investors pooling brain power to establish the foundation of real estate portfolios for generational wealth.
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