Compounding Interest is the Long Ladder in the game of Snakes and Ladders. Fast-tracking you from Tile #4 straight up to Tile #99! Please also read my “Life : Ladders & Snakes” blog.
Unlike merely rolling a dice and hoping for the best, Compounding Interest is an intentional choice and a firm and focussed commitment. Once committed, do not touch it. Let it quietly grow and subsequently bloom. If possible, keep a separate emergency financial pot for managing Life’s financial surprises.
Like all things concerning Virtue, Patience is the crucial vehicle.
When I came across these three fast-paced Snoopy figures at a recent toy fair (above image), it fondly reminded me of the concept of Compounding Interest.
Compounding Interest begins its incremental journey very slowly. It takes about 20 years before it starts to be exhilarating. Decades later, it’s gratifying to see your acorn seeds blossom into magnificent oak trees,
You will only get to enjoy the financial fruits of your patience of deferred consumption/enjoyment roughly in the last 20 years of your long-lived life.
The operative word is Roughly, depending on the amount you put in, how young you start, how long you intend to invest, what withdrawals you made along the way to purchase or fund other pressing stuff etc. Warren Buffett calls this Snowballing. This is the time to enjoy your bountiful Harvest, buddy.
I advised my son, whenever you are eyeing to buy a big ticket item, whenever possible, use your Profits from your Investments to pay for it down the Road. Minimise your impulse buying habit. Notice I said “minimise” not “forego”. I speak with experience.
To me, riding on a Camel is like mastering Finance.
Once my family enjoyed an exotic “Dinner In The Desert” extravaganza in Dubai. Included in the dinner package was a fun ride on camels, around the dinner campsite (above image).
A handler led the camel twice around the campsite. One camel for two members of my family. Whilst on the camel, I noticed a native also mounting on a camel but he single-handedly rode the camel towards the horizon into the setting sun, like Lawrence of Arabia. or was it like Indiana Jones.
Mastering Finance is akin to Riding a Camel. You must master the Camel and not be intimidated by it. You must control it not it controls you. It awaits your command on where to go, speed in travelling, when to stop for rest and refreshments, etc. One is advised to read finance and investment books, follow investment mentors (Warren Buffet, Charlie Munger, Peter Lynch, Tony Robbins, Ray Dalio, John Bogle, etc.) talk to financial experts in gaining skills of savings, investing and diversification.
It’s adviseable to ride the beast yourself rather than relying on a camel handler (investment analyst/manager) in “taking you for a ride” around the dinner site when you can skillfully ride the camel into the scenic sunset.
To avoid unpleasant and shocking outcomes, you must always be aware of and make your own decisions on your hard-earned investments.
