The Power Of Slow Compounding

in LeoFinance2 months ago

Everyone wants the get rich quick schemes. This is especially true in cryptocurrency. Talk, especially during bull runs, is of Lambos and mansions. Most want to be rich.

Certainly there is nothing wrong with that. Financial abundance is something that everyone should have. However, the get rich quick schemes, when not scams, are also get poor quick when things head down the other side.

The popping of bubbles can be very painful.

Few take the time to consider the true power of slow compounding. Obviously, this generates some big numbers over time yet it is also providing resiliency.

Here is a video from billionaire investor Chamath Palihapitiya. He discusses what he believes it the best company right now due to its long term growth. Also, he mentions in their how he would prefer to have a 15% annual growth rate for like 50 years.

The video is only a few minutes and well worth the time.

So what does $1,000 do over a long period of time. While not going out 50 years, let us see.

Year 1 $1,150.00
Year 2 $1,322.50
Year 3 $1,520.88
Year 4 $1,764.22
Year 5 $2,028.85
Year 6 $2,353.46
Year 7 $2,706.48
Year 8 $3,112.45
Year 9 $3,579.32
Year 10 $4,116.22

Yeah, pretty boring isn't it? No Lambos or mansions at this rate. Nevertheless, in a decade, at 15%, 1,000 became more than $4,100. That is not too bad.

However, things can start to get nuts from here.

Year 11 $4,733.65
Year 12 $5,443.70
Year 13 $6,260.25
Year 14 $7,199.29
Year 15 $8,351.18
Year 16 $9,603.85
Year 17 $11,044.43
Year 18 $12,701.10
Year 19 $14,606.26
Year 20 $16,943.26

That is a much bigger jump. Again, no Lambos but that is a healthy amount of money. To take $1,000, put no more money in, and let it compound over 20 years, we will have near $17,000.

Shall we go out a bit further?

Year 21 $19,484.75
Year 22 $22,407.46
Year 23 $25,768.58
Year 24 $29,633.87
Year 25 $34,078.95
Year 26 $39,190.80
Year 27 $45,069.42
Year 28 $51,829.83
Year 29 $59,604.30
Year 30 $68,544.95

Wow. $1,000 over 30 years, compounding at 15% annually is almost $70,000.

Is there anyone here who would be upset by that?

Of course, we know in the crypto world, the opportunity for outsized returns is possible, thus achieving a return of greater than 15% can be achieved.

The point is boring growth can really add up over time. Warren Buffet became the richest man in the world by getting around a 20% return for decades. At the same time, the wealthiest on Forbes list did not do it overnight.

Let's look at the names.

Elon Musk: Tesla Started 2003
Jeff Bezos: Amazon Started 1994
Bill Gates: Microsoft Started 1975
Bernard Arnault: Louis Vitton Started 1854
Mark Zuckerberg: Facebook Started 2004

Naturally the technology people made it to the top of the list faster than some of the old traditional industries and investors. However, they did it over a relatively long period of time. It was not a matter of hitting it big within a couple years.

The idea behind a project like @lbi-token is to Get Rich Slowly. There will be times when these returns are far outpaced. We will consider this gravy. However, for this decade, if we can just progress ahead at the pace of 20%, we will see much larger numbers than this chart shows.

That is the baseline we operate from and, so far, it serve us well in the other projects.

Article done by @taskmaster4450le

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Great post. This was one of the reasons why I decided to started investing (stock market and crypto) in the past. Start off slow and take those lost when they are small. Build a strategy that gives you enough a consistent ROI (for example 2% a month for 24% a year). Then when your capital increases, your gains also increase.

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Anyone who frets about 24% annually doesnt understand the concept of long term investing and wealth creation.

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I really like the scheme, although 50 years might be too long for me, currently I'm not nearly 40: p

But the sense of proportionate growth must make us reflect. There is no full stop, and if there is, it could be a big scam

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I take the risk to say that, LBI holders might want to kill me.
Even you bring 15% continuously year after year after year, you will make a man happy.
Getting rich slowly is the perfect motto, thank you for what you're doing.

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The baseline is 20%, same as @spinvest.

However, as we saw with that project, it can be outdone often.

We did over 80% the first year with the SPI project.

Even larger number in year 2.

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Coming from traditional investment that’s just surreal... I’m not used to those figures yet :D

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Almost 2% in the first month of LBI is a good start.

And this is just the beginning.

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Jesus Christ, did SPI really do 80% year 1?

Are you honestly expecting that return on LBI?

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And I think, LBI would outgrow SPI because of the base asset - LEO which is growing exponentially unlike HIVE/STEEM.

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Funny to think that we think that 30 year example is boring yet if it is broken down it is averaging out at 230% average per year on your original $1000. Slow and steady always wins the race and imagine if you add regular top ups to that original figure where you would be.

This is how I see Hive as it is compounded growth whilst you are staking regularly adding every day. I have been tracking my growth and it is not surprising that every year it grows quicker and quicker.

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It is a basic concept that most miss.

Living in an instant gratification world, too many feel that it is not worth the effort.

Long term is key.

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Investing in LBI is at a time way more lucrative that putting money in a bank and probable with loss risks for now !

The biggest risks for losses is that the price of lbi, leo and other token fall and I don't see any future where this happen. I really believe that this is exactly the opposite that will happen and the 15% APR is probably undervalued.

The growth of LBI, in terms of number of LEO, is pretty set. We just keep marching forward with activity, and it will grow.

You are right, token price in fiat terms (or even HIVE) could drop so that is something to be mindful of.

However, as long as the account is growing, over time, that will settle out too.

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Sounds like a really awesome plan. Of course there are the other rich people who just lay behind the scenes and pull in all of their money. I think you or someone else did a post on them a short time ago. I guarantee they are just pulling in smaller consistent returns over time. I am really excited about the potential LBI has. I am trying to get up to that next voting tier level.

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It's all about the compounds! I watched the video and the guy is absolutely right there with the social media quick fix dopamine hit and switching off. One of the reasons I moved away from all that on Facebook and Twitter, even discord as it just sucked away the mindset for long term growth in my experience.

Obviously if people want a bit more in the long term then invest a little more at the beginning within their own limits would be my non-financial advice 😁

That is why I put the placard at the bottom of each of my posts "Vision 2025".

To keep people's attention on the long term and not what is coming just this week.

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What will you do when we reach 2025?

It's a good idea to do have that constant reminder, I have a whiteboard with little things that keep my mind in check about things as well 😁

Great topic and something a lot of people miss. Obviously there are chances for 100X growth but they come with extreme risk and more often than not you end up with 100% instead of a 100X on your investment.
That doesn't mean you shouldn't hunt for them at all, but it shouldn't be your focus. I'm content with getting rich slowly. If I hit a jackpot it's all the better but I don't have to do so to achieve my goals.

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100x can reverse very quickly.

Of course, as we know with Bitcoin, while volatile, it does just keep growing in value over time.

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This is a great way to think of it. I believe many in the crypto world are expectant of quick gains since the last bull run. For me, LBI is something which I am happy to pick up and also be part of the community that is helping it grow. It is like buying an acorn. I know it is going to take some nurturing and I don't expect it to grow fast but I am sure one day it will be the centre of my forest.

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We all got in crypto with the idea of getting rich quickly while investing little to no effort. It's the way we were indoctrinated via movies, music etc...

There is no easy way though. Compounding and crypto will accelerate 30Y period to around 10 - at least i think so.

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I am very glad I got to know about the importance of saving and compounding early in my life . I am sure it will pay off when I am in my 40s . That doesn't mean I am not enjoying right now too , I am .

My idea isn't any bungalow or sports car , mostly social service.

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So how does this apply to LBI? You take your earnings and you stake them, reinvest them and so on, which leads to the compounding effect, right? Then we get our share payouts eventually and then we can decide to do the same, to increase the compounding effect even more?

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Each LBI is on sale for 1 LEO through the end of the month.

The Leo that is in the account is staked and used to curate. We also do daily posts which bring in more LEO. This all serves to produce a return. So far, we are just shy of 2% gained in the first month in value.

At some point, there will be a 50/50 split of the proceeds that come in between growing the LBI holdings and dividends if you will to the token holders. That was voted on recently and agree to revisit the issue in 3 months.

Ultimately, the idea is to get other avenues of revenue coming in just like SPInvest has with SPInvest-LEO.

We look to leverage both active and passive opportunities to grow the account and produce outsized returns.

This is all on top of what the LEO token price does in other currency valuations (USD, BTC, etc..).

If each LBI becomes worth 3 LEO, it is easy to see how the returns compounded one's holdings.

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2% in a month is amazing if you ask me!

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Compounding is amazing. Now add an $1,000 each year and that number is amazing.

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It would get rather large. An interesting exercise.

Perhaps the basis for another post. LOL

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Yes everyone should be doing it for retirement. Get to 18k/year saved and that's a nice retirement.

Get rich but slowly is just great. I have time, and don't need the money right now.
Ao keep on growing;)

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imagine that scale calculated instead of $ in LEO, with the LBI.

How much LEO will be worth a LBI that you bought investing 1 LEO. In 10 years, 20 years, 30 years? lol

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That is the way to think about it.

Care to toss our some numbers?

It is amazing to think about.

Can LEO hit $100? Stranger things have happened.

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The scheme is very good, even though it is a long time, up to five years, so we are still enthusiastic, even though we have to wait a long time, the important thing is for sure, I like this, good luck

The hardest part is to start and create wealth from nothing other than own work. Aside the 15%, the key is to keep working hard in early years and reinvest.

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This little list of compounded interest on 1000 dollars is intriguing, to say the least. Since yesterday, I'm listening to an ( audio ) book called "The Richest Man in Babylon". It's very interesting and your write up lines up with one of the many great lessons in that parable.


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Sometimes old knowledge is the best knowledge.

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This post is very inspiring, @lbi-token.

Those numbers work as great motivators

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Thanks Sir for this very educative piece. It's true that slow compounding helps us to build up gradually over a long time and it masses up to big things. Understanding this for the LBI token is very apt.

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wealth comes always long-term. Nobody, besides lucky gamblers, become rich overnight :)

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