3 Tricks Billionaires Use to Make Their Money Work for Them
Billionaires don't tend to become wealthy due to sheer luck. Often, it's because they make smart financial decisions that help them achieve their goals. And while most of us may not be destined for billionaire status, we can still follow in the footsteps of those who are wealthier than we are. Here are a few strategies billionaires commonly employ on the road to building their empires.
Compounding -- the concept of earning interest on interest -- is a very powerful wealth-building tool. And the more years you give yourself to take advantage of it, the more wealth you're apt to build.
Imagine you start investing $500 a month at the age of 22, and that your portfolio manages to generate an average annual 7% return for as long as you invest. Let's also assume you continue investing until the age of 72, giving yourself a total 50-year window. At that point, you'll be sitting on about $2.44 million despite having put in only $300,000 of your own money. That's the beauty of compounding combined with a lengthy window to capitalize on it.
Source Fool.com
