Albert Einstein supposedly remarked, “Compound interest is the eighth wonder of the world.”

In investing, compounding is the magical process where your investment grows exponentially over time as your earnings generate their own earnings. This principle can turn modest savings into substantial wealth, given enough time and consistent returns. However, our brains often struggle to grasp the long-term impact of compounding. 🤯

To illustrate, let’s look at something as simple as buying our daily cup of coffee. ☕️ Imagine you enjoy two steaming cups of coffee each morning. You can either go to Starbucks and get a Venti for $3.90 or brew it at home for $0.50. That $3.40 difference per day adds up to $1,238 over a year. That’s good money, but perhaps not enough to make you give up the satisfying ritual of holding a Starbucks cup in your hand.

But what if you compromised a bit—going to Starbucks twice a week and brewing coffee at home the other five days? Now you’re enjoying the best of both worlds: indulging twice a week and saving $884 per year. 💸

Now, here’s the exciting part: Do you know what $884 invested annually at an 8% return can grow into in 30 years?

It’s a whopping $100,000! 💰

That’s right!

Selectively splurging on your coffee can yield an extra $100,000, thanks to the magic of compounding over time.

Spending below your means, even just a little, can give you greater control over your life in the future and help you avoid working into old age. Small sacrifices today can lead to big rewards tomorrow!