How I Used the Compounding Effect to Generate Wealth

Hello my friends, this is Richard found of Short-Term Rental University and Airbnb Super Host.  I want to talk to you today about the power of compounding. Check it, but here’s the thing, I didn’t just buy this place. You know six months ago I started to prepare to buy this place. 30 years ago the investment decisions that I made, with my income & how I reinvested the income that investment generated. All put me in a position to buy this today!

So you might look at this and say “wow that’s great and I can’t afford it”, well guess what? 10 years ago, 15 years ago, 20 years ago, I couldn’t afford it either! But that’s the thing about the power of compounding interest! You need to start small you need to be diligent you need to force save you need to make sacrifices whatever it takes! But DO something, so whatever you do for your income, you get a w-2, or 1099, you’re a freelancer, you do rental arbitrage, you have a job! It doesn’t really matter what it is, make sure that you take some amount of money as much as you possibly can and save as much of it every single month every single quarter, or  buy something that generates appreciation!

I’m very bullish on real estate, I’ve always been bullish on real estate. Part of the reason I’m so bullish on real estate is that the US government is your partner in terms of tax advantage and tax-deferred savings and so the interest the compounding effect never gets diluted! If you do it right by paying taxes this is perfectly legal you can buy and sell investment properties using 1031 and defer in perpetuity as long as you meet all the rules the taxes so your entire asset doesn’t get that slice taken away.

So I’ve maintained that it’s a great investment and the reason that I’m standing here is about decisions that I made starting in 1998 when I bought my very first property! Investing in that and letting that compound effect work is really important. Charles is going to include a couple of examples that show the difference of time makes the key thing and compounding effect is not only savings as much as you can but also for as long as you can so that’s why I really am a very strong believer in 401ks IRAs whatever you can do as early as possible start at twenty one start at 25 if you’re older than that start at 40, 45, 50, it doesn’t matter but get started, because the time component of the compounding effect is critically important. And the main thing that I want you to do is to make some sacrifices today for your future gains tomorrow! Check out the compounding effect google it learn as much as you can about it but it was really simple. Save by assets that generate income reinvest that income so that the compounding effect takes place over time and before you know it you have far more in terms of net worth asset values income so that when you get to a position where you want to slow down or retire or whatever you have a huge nest egg but it’s up to you and you can do it I’ve done it many other people have done it you just need to be disciplined you need to save you need to make wise investments you need to reinvest you need to sacrifice today for your future tomorrow check out the investments that Charles put on there I hope you found this video helpful please go ahead and give us the thumbs up and like it and if you haven’t subscribed now’s the time

 

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