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Episode 3396:
Barney illustrates how building wealth can be simple, even lazy, if you master the power of compounding. By focusing on high savings rates, starting early, and investing consistently in low-cost index funds, you can create a compounding machine that does most of the heavy lifting for you, no crystal ball or complex strategies required.
Read along with the original article(s) here: https://theescapeartist.me/2019/11/09/how-to-build-a-compounding-machine/
Quotes to ponder:
"At a 50% savings rate, you will go from broke to financially independent in about 18/19 years."
"A 10% a year return from a stockmarket tracker fund achieved by a person with average intelligence beats a 2% return from a complex multi-asset approach achieved by someone who went to Harvard."
"When it comes to predicting future returns, there are 2 types of people: 1) those that don’t know and 2) those that don’t know they don’t know."
Episode references:
S&P 500 historical returns: https://www.slickcharts.com/sp500/returns
The Rule of 72: https://www.investopedia.com/terms/r/ruleof72.asp
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