Those who invest can increase their capital. Is it wise to invest today, or is it better to wait a few years? The moment you start investing has a major impact on your assets. What’s up with that? You can read This review and come up with the solutions that are perfect.
Time has a major impact on your assets
Let time do its work and your assets will increase. The positive return that you achieve annually accumulates, increasing your capital at an ever faster rate. But you can also achieve negative returns. The year in which you make a negative return affects your total assets. It therefore matters in which year your return is positive or negative. How big is this influence?
Suppose you have a starting capital of $ 5,000. Every year you put in $ 4,000 extra to invest.In the first year you achieve a positive return of 40% and the following year the return is also 40%, but negative. All years thereafter the return is the same, namely 8%. Your assets after ten years are then $ 58,167. But how high would your assets have been if you had a loss in the first year and a profit of 40% in the second year?
The correct answer is: higher. Because your return has decreased in the first year and increased in the second, your assets will be equal to $ 64,090 after ten yearsand that while your investment is exactly the same. Your assets are now $ 5,923 higher.
How is that possible?
Let me first explain what would have happened if you had not put in extra money every year. In that case, your assets would be the same in both situations. The order doesn’t matter now. This can be calculated by calculating the $ 5,000 plus 40% and then calculating that result minus 40%. In the second calculation, you first calculate what is $ 5,000 minus 40% and then you calculate what that result plus 40% is. In both cases you arrive at an amount of $ 4,200. In both cases your assets have decreased.
How then can the power be different in the first example?
In the first example, you invest an additional amount every year. That amount is not yet added to the calculation in the first year. But in the second yearas a result, the additional $ 4,000 that is invested will be worth more money, if the return in the second year is positive. That profit is reinvested every year, so that after ten years the difference is $ 5,923.