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The wonderful miracles of saving and compounding of money!
Ever wondered why rich people silently became rich? And why people like us keep on wondering how?
There are two things needed these days first, for rich people to find out how poor people live; and second for poor people to find out how rich people work.
- John Foster
So how do the rich become rich?
Many would think gifted talents, birth or marriage in rich families or just by luck. But to become rich is one thing and to maintain the "rich status" is another. Improper financial management can turn princess into paupers in no time.
So the secret of "rich getting richer?"
What people like you and me fail to understand is that rich people have consistently worked on the plan called "compounding of money".
If you want to get rich, just find someone making lots of money and do what he's doing.
- J.Paul Getty
Regarding compounding of money, I would like to tell you a story about 88 year old washer woman named Osleola Mccarty.
Oseola Mccarty has lived a tough life that's for sure. At age eight she was forced to drop out of second grade to help her mother wash and iron the neighbour's clothes. She charged $1.50 to $2 a bundle until the end of World war 2. After the war she increased her price to $10 per bundle. She never managed to earn more than $9000 a year.
Oseola was 40 years old when she finally was able to start saving money. She put her savings in a local bank and never touched it. Overtime, her savings added up, and the principle and interest on those savings kept building and building.
In the summer of 1995, Oseola Mccarty - who never made more than $9,000 a year - donated $150,000 to the university of Southern Missippi.
In Oseola's own words "The secret to building a fortune is compounding interest."
This is the power of saving and compounding of money. No wonder, Albert Einstein called compounding "the 8th wonder of the world."
So ultimately what is compounding? Webster's defines compound interest as the interest paid on both the principle and the accumulated unpaid interest." the key word in the definition is "accumulated". If the principle or interest is spent instead of reinvesting, the power of compounding is diminished. Compounding can be be of time as well as money. Afterall time is more valuable than money.
So compounding of time or money is when money works for you to save you time for doing what you want.
In today's world there are two ways of compounding your money or time:
- Network marketing:- It is a substitue for franchising. You don;t need huge amount of money to start but few hundred dollars is enough to get started. It is compounding of both time and money which I love. It is the most rapid way to get rich with very minimum investment.
- Investing in ULIP:- ULIP is unit linked insurance policy. Where the money is invested in stock market as done by mutual funds and also you get insured for life. The best part is you can withdraw the whole or partial sum after stipulated lock in period.
Of course the best would be the combination of network marketing and ULIP. This the true way of getting wealthy! :-)