Albert Einstein, one of the most intelligent people who ever lived, called it the eighth wonder of the world. What he was talking about was the effect of compounding. Compound interest to be precise.
Those in society who are materially rich know how to compound their assets so they forever grow in value.
While most people commence purchasing consumable "feel-good" items like flashy motor vehicles, large televisions and yearly holidays overseas, the rich-minded folk commence accumulating assets that compound in value. As the years pass by, the gulf between the two becomes exponentially wider.
For example, at an early age people with a rich mentality will acquire well-located real estate and quality shares. Those with poor mentality recklessly spend their money on depreciating items that are worth less and less as the years go by.
By way of explanation, in the examples above what do you think the value would be after say, two, five or ten years of a flashy motor vehicle, that large television or any of the holidays? In many instances the people buying these things go into debt to fund them in the first place, so they are making large interest payments on consumables that depreciate immediately from the moment they are bought.
Eventually, the rich-minded folk reach a point of "critical mass" in their wealth creation whereby their assets are appreciating so rapidly that they no longer have to work. Their assets keep building wealth on a daily basis. The poor-minded folk, on the other hand, always have to work because they continually need to fund their worthless extravagances.
Here is an example of rich mentality versus poor mentality. Let's say you found one of those fabled genie bottles. You give it a rub and to your astonishment out pops the genie. Now he doesn't offer you three wishes as the legend goes. He has only one offer for you and it is a choice. Here is the choice:
First choice - you can have $1 million no questions asked. Agree now and it is yours - immediately.
Second choice - you can have 1 cent today doubled every day for a full 31 day month. That is, 1 cent increases to 2 cents which increases to 4 cents and so on for the full month. At the end of the month you get to keep the final figure.
"Make your choice now!" commands the genie.
It hardly seems like a sensible choice at all, does it? Well, do the math yourself. Work it out. Would you have made the superior choice?
The rich get richer because of the choices they make, the knowledge they seek and the resistance they have to immediate gratification. That is why they just keep on getting richer. You can too. The secret is education and discipline. You can learn much more about these principles at my website.
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