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Compounding: The Science Of Exponential Money Generation

It all begins with a simple calculation.

You are home on a rainy Sunday afternoon, looking at the flashy
calculator you found on sale last month for $12 at the local buy n’ save.
It was a good buy.

You find the percentage button, and try to decipher how it all works.

Before long you are calculating percentages like a pro.

An hour later, you stumbled across an idea everyone with a calculator on
a rainy Sunday afternoon stumble across. That of calculating the money
you have squirled away at the local bank branch in a fixed term savings
account. You recall the rate was guaranteed 7% and even though you are
only locked in for 12 months, you decide this money will become your
retirement fund. All $3000 of it.

So you start crunching the numbers for ..oh, say 30 years.

In 30 years, you calculate that it will become $22,836.76 Wow! even if
you do nothing. Not bad.

A show comes on the television that grabs your attention, and your
calculator is absently passed onto the coffee table as you get
comfortable, and get set to watch “The most dangerous animals on earth-a
ten point count down”.

You watch, but the calculator sits patiently within your line of sight.
During one of the ad breaks, you get another idea.

What if you could find some other investment vehicle to grow your money?
What if you could find somebody that offered more interest?

You don't know where you will find somebody willing to offer you this
much interest but you try it anyway....30%

30% at 30 years.

Wow. $3000 turns into $7, 859,983! Wow! you hum to yourself. You begin to
pay a lot of attention to your calculator, the TV show is up to number
one, the most dangerous animal on the planet is........you don't care.
You don’t even hear the television.

Suddenly a wise voice enters your head. You know its wise, because it
told you. It says hey, 30% is not a huge jump from 7%. Yes it is a lot
different, but not proportional to the result. $22,000 odd dollars,
compared to nearly 8 million is a big difference.

There’s something to this.

You resolve to investigate this. You steady yourself for the figure that
will come next, when you try 100% You start crunching.

...after picking yourself up off the floor, you decide to do some
research on your favourite resource site Ezine, a search for compounding
you find this article.

Surely it can’t be that hard to maintain a level of compounding that’s
fairly interesting over a number of years? You reason.

And you know what? You are right. It's a science. Its simple math and the
results are under your control if you want them to be.

Your actions determine your results, why wait 30 years for compounding to
work for you?

You can manufacture exceptional results with a some solid research, and
deploying that knowledge.

There’s a lot more to Compounding than the math. But look, they say in
life, you get what you put in, however, compounding is different. When
compounding your own money, as we have seen, that theory is just
inadequate to express the returns.

Its time you investigated compounding properly. Keep an eye out for my
articles here, or visit our web site right now on the link below for a
lot of free insights and open content pages.

(c) Martin Thomas 2005.

About the Author

Martin is an investor who is also part of a team that maintain a website
for ordinary people to find rapid resource pathways to wealth.
opportunity-investor . With quality content heavily slanted towards good
common sense.

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