How to build wealth through HBD compound savings!

avatar
(Edited)

A1.jpgEdited from Pixabay

I love math a lot, which is why I always stick around my calculator, punching in figures and trying to make sense of them. But then, its not just a random pressing of buttons. I actually try to see what multiplication, division, or addition of numbers could get me to my set goals in record time. And when I got to HBD savings, everything started making a lot more sense. So lets talk about how to utilize HBD savings and compound interests to grow wealth!

A lot has been written about HBD savings. You already know that when you put your HBD in savings, you earn 20% per annum of the amount you are holding. After each 30 days, one twelfth of your interest is paid out - no not into your HBD balance, but added (compounded) to the HBD in your savings. In this way, your capital grows with each interest paid. By design that is compound interests.

It would be nice to start by explaining why such compound interests in savings is a secret to becoming wealthy fast!

So what is so special about compounding your savings?

A lot is really special about compound savings. Whether you are an investor or you simply wants to grow your finances over time, pay attention to the following 3 cool stuffs about compounding savings:

  • Interests on top of your Interests: The first thing so cool about compound interest, or compounding your savings is that you earn interest not just on your initial capital, but also on the interests. Remember that in compound interest, your interest is automatically added to the capital after each period. So basically, your starting capital does not remain the same amount. Instead, it increases each time the interest is added. The only time your capital remains the same is in the first month or period before the first interest arrives. After that, the capital starts growing with the addition of each interest. Isn't that beautiful?

So when your interest is added to the capital, you are not only earning interest on the initial capital. Instead, the interest is earned on the new interest added to the capital. So basically as the months or years pass by, the initial capital swells because interest is earned and added to the capital. This is a cool way to automate wealth growth - a rare benefit of compounding savings.

  • Time becomes more valuable: Remember that compound interest works with time and each cycle of payment happens on a set time. That is nice. Now the beauty of it is that the investment gets better and grows bigger with time. Like I mentioned earlier, the initial deposit or capital starts growing after the first interest is paid out. Yes, because the interest is being added to the capital automatically. Thus, the value of the whole investment appreciates with time.

If you are looking for an area where compound savings beat other methods of growing wealth, it is in time. There is a sort of geometric growth which is tied in with the time the compounding happens. The more time there is to compound your savings, the more value your wealth accumulates. So it is practically possible to start from a small capital and compound it over a long period of time. The small initial capital becomes something so huge that you may be surprised at the final amount you have. Basically, time makes you more wealth in compound savings/interest.

  • Your money works for you: Your money should be making more money for you instead of sitting idle somewhere. This happens only through compound interest. Remember that your initial capital is all you have to do to kick-start the compounding. The capital and time does the rest for you.

Its easy understand how your money works for you and some people call it the magic of compounding wealth. Your initial capital produces the interest. Each interest is added to the initial capital and it grows and produces more interest, which is added back to the growing capital. This is an endless circle in which the initial capital with time, will amass great wealth for you. The initial capital is your money that is making more money or basically working for you. Isn't that amazing?

No lets show the numbers in HBD savings..

It is so beautiful that the Hive blockchain already have a compound savings project in HBD savings. Whether you will take advantage of it is really up to you. But then, you know by now that if you lock your HBD in savings, you receive 20% per annum in interest, which is compounded to your initial HBD in savings every 30 days.

Having understood the working principles of compound interests, I will demonstrate your initial HBD in savings will become huge wealth over times as it compounds.

Note: I will use an online Compound interest calculator. Again, I will also demonstrate with HBD initial capital of 5000.

How much will 5000 HBD in savings become after 2 years

capital:5000 HBD
Interest rate: 20% per annum
Duration: 2 years
Total interest after duration: 2,434 HBD
Investment value after duration: 7,434 HBD

A1.jpgFrom: TheCalculatorSite

How much will 5000 HBD in savings become after 5 years

capital:5000 HBD
Interest rate: 20% per annum
Duration: 5 years
Total interest after duration: 8,479 HBD
Investment value after duration: 13,479 HBD

A2.jpgFrom: TheCalculatorSite

How much will 5000 HBD in savings become after 10 years

capital:5000 HBD
Interest rate: 20% per annum
Duration: 10 years
Total interest after duration: 31,341 HBD
Investment value after duration: 36,341 HBD

A3.jpgFrom: TheCalculatorSite

Note: You can see the detailed breakdown of each interest by month and its annual accumulation in TheCalculatorSite. I did not include it for easy viewing.

..On a final note..

The problem with compound interests is that many people (me formerly inclusive, but not now) cannot stick around for a long time. The image that usually comes to mind when multiple years is mentioned, is one of eternity. But, for the few that understood the concept of compound interests and how it builds wealth seamlessly will appreciate that patience is a virtue.

Compounding savings is not for the feeble-minded. It requires discipline, being committed to managing your finances without having to dip hands into your savings. Currently, I have some HBD in savings and hope to leave it there to compound for as long a time as I can leave it. Definitely not touching it soon!

If you can develop a long-term savings culture, you can easily build wealth through HBD compound savings.

Terms Definitions from: LeoGlossary by @taskmaster4450le

Posted Using LeoFinance Beta



0
0
0.000
4 comments
avatar

Congratulations @fokusnow! You have completed the following achievement on the Hive blockchain And have been rewarded with New badge(s)

You received more than 4750 upvotes.
Your next target is to reach 5000 upvotes.

You can view your badges on your board and compare yourself to others in the Ranking
If you no longer want to receive notifications, reply to this comment with the word STOP

Check out our last posts:

LEO Power Up Day - January 15, 2023
The Hive Gamification Proposal Renewal
0
0
0.000
avatar

This post has been manually curated by @bhattg from Indiaunited community. Join us on our Discord Server.

Do you know that you can earn a passive income by delegating your Leo power to @india-leo account? We share 100 % of the curation rewards with the delegators.

Please contribute to the community by upvoting this comment and posts made by @indiaunited.

0
0
0.000