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(Precious) Words of Wisdom : "Risk comes from not knowing what you’re doing." ~ Warren Buffett

Compound Your Way to Wealth

Legend goes that once upon a time, a King, happy with one of his ministers, decided to reward him. When asked for his choice, the minister pointed to a chessboard and remarked that he wanted one rupee for the 1st square, two rupees for the 2nd square, four rupees for the 3rd square, eight rupees for the 4th square, sixteen rupees for the 5th square and so on until the 64th square, with the amount doubling as we move up each square. 

However, after a few minutes of thought, the minister decided that he would be more than happy, only with the amount on the 64th square. He was willing to not consider the amounts on the squares one through sixty-three.

The King looked puzzled. Tales of his generosity and benevolence were known far and wide. Thus, he wondered, “Why is the minister, who is otherwise a very wise man, asking for such an insignificant gift”? Nevertheless, he decided to go with what his minister wished and directed his treasurer to fetch the desired amount.

A few hours later, the treasurer returned to inform the King that it would be impossible to meet the minister’s request. 

The King and everyone present in the durbar were shocked, when the treasurer mentioned that the amount on the 64th square worked out to be Rs 9,223,372,036,854,780,000 which was way beyond the entire wealth of the kingdom.

I wonder what must have happened to the King thereafter, but at least, the minister left an incredible example of what in modern parlance is termed as “Compounding”.

By the way, this story is not meant to be merely enjoyed and forgotten. It contains a secret, so magical that it can turn you into a multi-millionaire. Of course, I agree that life is much more than money, but as Rita Davenport preaches “Money isn’t everything…but it ranks right up there with oxygen.”

In very simple terms, the process of earning, “income on income” is termed as Compounding.

The beauty of compounding lies in the fact that: 
a.  It is a very powerful force to multiply money.
b.  It is a very simple idea to understand. 
c.  It is a very easy tool to implement. 

The bottom-line: Even Albert Einstein was in awe of the power of compounding and described it as the eighth wonder of the world.  
...Know how you can compound your way to wealth in my latest publication 'Your Guide to Finance and Investments'.

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