Takes time to build good sh*t

My mentor once told me “it takes time to build good sh*t”

He could not be any more correct.?

Whether you are building a great company, investment portfolio, or even a great physique, it takes time.?

And the sooner you start the better off you will be. Compound interest is a great force.

Albert Einstein called compound interest the 8th wonder of the world.?

Let’s take a look at how powerful time and compound interest can be. Let’s say I asked you if you would rather have $1,000 per month invested in an index fund for the next 30 years?

OR?

wait 10 years from today and I will give you DOUBLE the amount of money you would have gotten over the 10 years in the first option ($240K total) and you can invest it in the same index fund for 20 years.

To simplify your options:

Option 1

Initial contribution: $0

Monthly contributions: $1,000 Assumed interest rate: 11%

Timeline: 30 years

Option 2

Initial contribution: $240,000

Monthly deposits: $0

Assumed interest rate: 11%

Timeline: 20 years

Ready to see the results?

$1,000/month x 30 years

$240,000 x 20 years

By delaying your investments even just 10 years, even if you try to catch up by investing double the money you would have invested in 10 years in option 1, you will still fall behind by over $400k!

Keep in mind, I made the two options drastically different to highlight the effect of compound interest, and one of them being relatively easy to accomplish.

$1,000/mo!

If you were to only put $120k and let it compound over 30 years and never add anything to it you will have an account with well over $2.7m.?

What about if you tried to catch up by investing $360k??

It would take you 20 years at $360k invested upfront to make the same as $120k invested over 30 years.

Moral of the story, start sooner and play the long term game.

Normally I do real estate, but for the sake of the example I wanted to use some relatively low return that anyone can compare.?

In a lot of our real estate deals we target returns much higher than what an index fund can provide.

Want to see our upcoming deals? Join our list here

Satch Bernhardt

V1 Capital