Compound Interest is What May Get You Rich

bitatlas (46)in #cryptocurrency • 7 years ago

Compound Interest is What May Get You Rich

Compound is a powerful tool. When you decide to reinvest your interest, you will get interest on interest.
The “traditional” explanation is this: you have you money in one of those now obsolete banks and the bank pays 1% interest a year, you put € 1000 in that deposit. After that year you will have € 1000 + € 10 (the interest). Now that you have € 1010, if you reinvest, next year you will have 1% over €1010 that is €10,1. Next period you will receive even more.
And… with the interest banks pay at the moment, maybe you get rich 500 years from now. Not fair!

You need to accelerate your compound interest in order to get rich in this life and not after life!

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The formula to calculate compound interest is

                            = [P (1 + i)n] – P

(Where P = Principal, i = nominal annual interest rate in percentage terms, and n = number of compounding periods.)

Your investment grows faster because it takes into consideration the profit of the previous period, at similar growth rate (actually a mathematical constant).

Ok guys enough bullshit! How do I get rich?!

As I said, if you want to get rich you have to get somewhere a business that pays you a bigger interest than the interest that those crappy banks pay. Also, e crypto maniacs don’t like to settle our money in Fiat currency inside those obsolete banks right?
We want more!

Whatever is your business, I believe that reinvest is the best strategy to get more, to ripe off all the juicy money from the business! However, I’m going to give as example something that some of you may be familiar with: cryptocurrency mining.

I don’t refer anymore to it by Bitcoin Mining because I really believe that you should look at other altcoins to mine. Bitcoin is pretty nice but some other cryptos have also huge potential and that’s a plus.

Ok, let´s get into the calcs yeah?!

If you invest let’s say € 1000 in bitcoin mining, for example a cloud mining company, you will get in most of the cases daily payouts, i.e. the mining revenue is going directly to you crypto wallet.
Let’s also have in consideration that your interest here is 3,25% every week (this is actually what I get).
How long it would take to double your investment without compound?

€1000 X 3,25% = €3,25 per week

€1000 / €3,25 = 307 weeks

Without compound interest you would take 307 weeks to get more €1000 from your investment.

Now, boys and girls, are you ready to see the power of the compound interest?

€1000 ((1+3,25%)^x)-1=1000 Where X will be 22,15 Weeks.

How to I know so easily that? Because of the Rule of the 72. The rule of the 72 is the most easy way to know how long it takes to double your investment with a certain interest, compounding that interest.
So… if you have an interest of 3,25% you just divide it by 72.

Oh, by the way, with that crappy bank interest of 1% how long it would take to double your money? Oh yes, 72 years! Probably I’m already seven feet…

Getting back to our wonderful mining business that is paying me 3,25% per week:

As you can see, your first €1000 take 22 weeks but your second €1000 profit will take only 13 weeks! Amazing right?! After that comes the moon!

Look at this beautiful graph!

At the left axis you find the total of your investment and at the right axis the weekly revenue. Fantastic right!

That why I like so much to cloud mine…. because to compound if to click in the button reinvest or transfer the profit from my wallet to cloud mining power. Easy AF!!!

If you compound you investment this way and with this interest, you will triple your money in only 36 weeks and only one year will turn your €1000 investment in more than €5000!!! WOW

That's the way to get RICH!