AND A BIGGER BIT BECOMES A LOT MORE
The power of compounding was well understood by Albert Einstein. He said “Compound interest is the eighth wonder of the world. He who understands it, earns it … he who doesn’t … pays it.”
The theory of the power of compounding by necessity is embedded in every plan to create wealth.
It works this way. If just a little bit of money with it’s annual interest is reinvested for another year, it earns a little bit more interest the following year, then the new larger amount can be reinvested…..and repeat….and repeat. If that process is carried out for years or decades, it is astounding how much wealth is created.
These are the steps to make it happen successfully:
- Start early. The more years you allow for compounding to work it’s magic, the more astounding the result will be.
- Spend less than you earn. After-all, you need some spare money to invest with.
- Find somewhere for the money to safely grow and to compound.
Many people find success this way, by investing a little bit of money each month e.g. $200/month into a superannuation fund. The annual compounding growth can make them wealthy by the time they retire. But’s that’s still too slow for Canterbury.
The Canterbury system implements the above strategy – but we do it bigger and on steroids. Rather than starting with $200/month, we start with say a $700,000 property. Imagine how much compounding a $700,000 asset can do over the decades compared to starting with $200.
We all know that property on average doubles in value every 7 to 10 years. Property values grow and compound and so do the rents. You win both ways. Better still, as the property grows in value, the extra equity allows you to buy another property. Then you have two properties compounding, then four properties. It’s fairly easy to own 10 or more properties this way.
That is why many apparently normal people in Australia individually own hundreds of houses.
Canterbury implement all of this for clients – and we have done so for 38 years.