Similar to “Dollar Cost Averaging”, “Value Averaging” is also investing on a regular basis; weekly or monthly. The only difference is you do not invest the same amount monthly. “Value Averaging” means you are value investing. You invest more money when the market is down; the fund price is down, and you invest less money when the price goes up.

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Dollar Cost Average is the purchasing of a fixed dollar amount of a particular investment or fund on a regular basis, regardless of the fund price.

You have to buy an initial amount of around $1,000; varies in different countries and depending on the fund house you are investing in. After the initial investment, you can then decide to put a certain amount into the fund, minimum usually is around $100 per month. The amount you invest monthly will definitely depend on your personal affordability.

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The Rule of 72 is to divide the number of 72 by the interest rate or the average earning rate and the answer will be how long it will take for your money to double. For example, a $10,000 investment paying at 9% (without reinvesting the interest) would double in 8 years (72 divide by 9 = 8, this is the number of years for your $10,000 to double to $20,000.

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Rice on a chessboard

A courtier presented the Persian king with a beautiful, hand-made chessboard. The king asked what he would like in return for his gift and the courtier surprised the king by asking for one grain of rice on the first square, two grains on the second, four grains on the third etc. The king readily agreed and asked for the rice to be brought. All went well at first, but the requirement for 2^{n - 1} grains on the nth square demanded over a million grains on the 21st square, more than a million million on the 41st and there simply was not enough rice in the whole world for the final squares. (From Meadows et al. 1972, p.29 via Porritt 2005)

continue reading "Compounding - The 8th Wonder of the World"

lĭn’ē-ər
adj.
of, or relating to, or resembling a straight line
having only one dimension

Income creation is a typical example of linear growth. This is where you exchange your time for money, be it as a ordinary worker, a professional or running your own business. This is the time for money trap where you exchange your time for money.

continue reading "Linear Growth versus Exponential Growth"

Leveraged Growth
Working Smart Not Working Hard

The

story

continue reading "Leveraged Growth - The Coca-cola Story"

The concept of exchanging “Time for Money” is really limiting. There is that much we can do with our 24-hour, so we will have to look for other ways and means to add to our income, to achieve the goal we have set for ourselves to create wealth.

If we can find a way to leverage our time and effort our goals will be achieved faster and easier.

continue reading "The Power of Leveraging"