This might change your life: What is Compound Interest and How to stay wealthy
Why we should invest: Compound Interest
I strongly believe that everyone in our life may have heard about the words “Compound Interest”, for me I have been hearing it ad nauseam but never got a chance to implement my investment as a senior college student. But first, let’s take a look at what compound interest is and how it works in case you don’t know.
Let’s start with an analogy. In the past, the Earth used to be covered by a gritty thick ice called the Ice Age. However, the Earth wasn’t formed by any drastic climate change but it started from small which was from a slightly cooler summer. With the tiny amount of ice that is left for each year, decade, and millennium. Ultimately, it becomes an ice age.
It really hits the bull’s eyes by describing the beauty and wonder of compound interest. Everything starts from a small amount of money, then overtime it compounds into a huge amount of assets. Therefore, we should start to invest right now because the sooner we start, the more the interest compounds.
Nonetheless, there is more than one way to skin a cat. Besides investing in the stock market, there are two things I stay committed to doing in a look period of time are YouTube and Blogging. Even though it will not be a drastic shift in my life, I strongly believe I am going to be different from others. Eventually, waiting for the compound interest to run wild.
Staying Wealthy
As we already addressed above, compound interest is a long term game which is the prerequisite of consistency. Even though we feel quite optimistic about the future (long-term goals), we also need to take heed of current life (short-term goals) in order to SURVIVE.
Let me tell you a story about myself.
I was born and bred in a not wealthy family. Fortunately, my parents were still able to handle me until I got into the college at NTUST in Taiwan (I am Vietnamese). My current college life is all surrounding studying and part-time jobs to subsist on life in Taiwan. I have a long term goal is studying, writing a blog, and making YouTube videos. However, when I was focused on my long-term I neglected my short-term goal, which was to work in my part-time job. I reduce the working hours in my part-time job. Because I thought as long as I focus on the long-term, everything is going to be alright. But the truth is when I neglect the short-term goal, a divergent aspect of life also suffers. I don’t have enough money in my savings for my living and my tuition especially when the pandemic started to break out in Taiwan.
The gist is that we can be optimistic that the long-term growth trajectory is up and to the right (by compounding interest), but equally sure that the road between now and then is filled with landmines, and always will be.
Thank you for reading, what is your long-term and short-term goals? Please comment below.
