Full Transcript
Hi Everyone, welcome to the You’re Daily Cup of Joe Podcast, with your host Joe Bautista. In this podcast, my goal is to give you quick lessons that you can reflect on in your journal so you can grow yourself physically, mentally, emotionally, and spiritually and have a better career, better relationships, and better personal finances while you enjoy your morning cup of coffee.
I’m also the author of the book “More You Know, More You Grow: How to Get Better Every Day”. In this book, I wrote down over 30 tips to help you grow in those four cornerstones. I’m also the founder of Grow With Joe, where I combine self-development coaching and financial planning for Latino Professionals.
In today’s episode, we are going to talk about how compound interest is the eighth wonder of the world as Albert Einstein has said. If you don’t understand how compound interest works, just think of it as your money making money. If you had $1000 dollars in an account earning 10% annually, at the end of one year you will have $1100. So your thousand dollars made a $100.
Now let’s said you leave that $1100 into another account that earned 10%. At the end of year two, you would have made $110 and your account would be $1210. Again for year three, you would have made $121 and have an account value of $1431. So in three years, you made $431.
Now at a 10% interest rate, this means your money will double every 7.2 years. Now there are risks involved so make sure you do your research but using 10% is an easy number for people to follow. If you were to keep this $ 1000 dollar invested for 40 years and averaged a 10% return, your money would be worth $45,259.26.
And I know for myself, I rather just save $1000 to get to $45,259.26 than to save $1109.57 a year for 40 years to get to the same amount. And that’s the power of compound interest, you can do a lot less work and enjoy other parts of your life.
Compound interest also works with your social capital and human capital. Your social capital is your network of friends and your human capital is your ability to make good decisions in life. If your constant work on your network and self for 40 years, you can have a lot of options down the road.
I’ve been work hard on my self and my network for the past 8 years, and I love my life now. I’ve read 230 books and I’ve been listening to 20 hours of podcasts a week. Now I have more options in my life and more control. I don’t need to save $1100 a year to get to $45000. I can use $1000 today and my compound skills to do the same.
I grew up in a mobile home and my parents are blue-collar workers and my dad is an immigrant from Mexico. I saw that if I learned things as a kid, then I can get better. I think video games helped out a lot with this. I used to play a lot of Madden, and I would read the instruction manual before I played and I would practice doing their scrimmage simulation. So then when I faced my friends, I would destroy them.
I think was the feedback I need to show that I could improve and if you just keep improving, then your experience just compounds on itself self and now your a master.
I read so much and listen to so many podcasts because I’m learning how to make better decisions. My compound wisdom allows me to figure out what to do faster with less anxiety and stress. And this took time. It really took 16 years to build up this wisdom and I’m going to continue to learn things so I build up my human capital.
I have read a lot of books and really successful people read books. Warren Buffett reads 500 pages a day, Robert Moses the most powerful man in New York during the early 1900s read a lot of books, the stoic philosophers read books. And then once you read the book, then you implement that information into your life to make your life better. This takes times but when you make the breakthrough, you’re going to enjoy the benefits of compound interest.
That’s it for today’s episode, to summarize it, compound interest is the eighth wonder of the world as Albert Einstein said, and this guy says something is wonderful, I should probably pay attention to it and see how I can implement in my life. And the way you can implement compound interest in your life that will give you the most benefit is to focus on your financial, social, and human capital. These three cornerstones can provide you a lot of control over your life and help you when times get tough. And make sure you’re placing your capital in an area that gives a high return. A 10% return doubles your capital every 7.2 years. A 1% return doubles your capital ever 72 years. So choose wisely.
If you would like to get the journal questions for today’s episode, you can sign-up for my monthly journaling subscription newsletter, where you get daily journal questions Monday through Friday, and as a bonus, you will also get my time management course and my personal development cheat sheet. You can get all this for $13/mo, which is less than the cost of an audible subscription and it’s less work to gain more wisdom. You can get this offer at growwithjoe.me/journal
Thanks for listening today! To get a free copy of my Audiobook “More You Know, More You Grow: How to get better every day” just go to my website growwithjoe.me/book and you can download it right there.
I have a quiz on my website that grades your inner circle, so if you want to find out if your inner circle is an A, B, C, D, or F, you can take that quiz at growwithjoe.me/quiz
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Thanks for joining me today and remember if you go with Joe, you can grow with Joe, cause Joe knows Dough.
*Music outro
