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Added for You - The Magic of Compounding - Part II
Looking after a new employee during their first few weeks at work can mean the difference between their success and failure as employees as well as your success and failure as an employer, manager or supervisor.Proper orientation determines how fast the new employee can be productive and efficient in his or her new job while giving you a good opportunity to make your new employee an efficient part of your team.Below are 15 suggestions that will help you deal with your new employees during their first few weeks to help make sure that they get started on the right
Let's see how that works.
Warren Buffet's Geometric Progression Starting Dollar Amount: $100 million Time Periods Involved: Nine 3 year and 4 month periods
Period Time Taken
I am sure I have listened to just about every Internet Marketing Expert alive on this planet talk about web traffic. Some will tell you, that you need to get as much web traffic as possible, others will tell you that you only need a little bit of traffic to make money on the web. Each of these gurus talk about how they achieved so many sales from 10,000 visitors, or we will guarantee you will make at least 1 sale from every 1,000 visitors you have at your website even if it’s a ugly website.Well, I don’t want to give you any false hopes on how many sales you will m
Really understanding compounding will make all the difference in investing. I believe that Warren Buffett, the world's greatest investor, is hardwired to think geometrically. He is rich beyond dreams because he totally gets the magic of compounding, and he executes on the concept. I am going to get these numbers wrong because I'm doing them from memory but it doesn't matter. You'll get the concept. Buffett started a partnership way back when. He had a number of limited partners invest with him, and he took 20% of the gains. In the late 1960s he terminated the partnership with his famous letter, "When you no longer understand the way the game is played, it's time to leave the game." I'm paraphrasing, even though it's in quotes.
Buffet took about $100 million out of that first partnership for himself, so he was working with $100 million, keep that in mind. In 1974 when the bear market bottomed, it might have been early 1975, he started another rise...he took over Berkshire Hathaway. Buffet, since the 1970's, has been getting a compounded (remember that means exponential) growth rate of about 22 to 24%.
This is where I introduce you to the cousin of the Magic of Compounding, which is called the Rule of 72. With the Rule of 72 you can calculate how long it will take you to double your money at any given rate of return. OK? Let’s take an example. If you're earning 12% on your money and you want to know how long it will take to double it (we're compounding, remember?) divide 72 by 12, and your answer is 6. It will take 6 years to double your money. Let’s do another one. If you're getting 6% on your money, divide 72 by 6 and you'll see that it will take 12 years to double. If you're getting 9%, it's 72 divided by 9, or 8 years to double up.
As for Warren Buffett, he's getting 22% on his money. This means you divide 72 by 22 and gee, in only 3.27 years, or every 3 years and 4 months, he doubles his money. Since he's been at it about 35 years with that $100 million he had to play with, he's doubled his original $100 million almost nine times. You get that by taking 35 years and dividing by a double every 3 years and 4 months. It equals 10.70, or let's go with nine doubles to adjust for a rate of compounding that is varying. The key point is he's not making 9 times his money with the $100 million, that would be an arithmetic progression that would give him $900 million. He's making nine doubles, a geometric or compounded progression.
Let's see how that works.
Warren Buffet's Geometric Progression Starting Dollar Amount: $100 million Time Periods Involved: Nine 3 year and 4 month periods
Period Time Taken
That subject line got your attention, right? And it really relates to what this article talks about. What is that? You need to learn how to motivate people to buy your stuff right now. And you do not have time to study and practice for years under some master of the mysterious craft of copywriting?No problem, just write in the same manner that people who have had a few drinks, speak--no, not so many drinks that they are babbling incoherently, but enough so that they loosen up and let their emotions flow freely.Remember that people buy based on emotio
Buffet took about $100 million out of that first partnership for himself, so he was working with $100 million, keep that in mind. In 1974 when the bear market bottomed, it might have been early 1975, he started another rise...he took over Berkshire Hathaway. Buffet, since the 1970's, has been getting a compounded (remember that means exponential) growth rate of about 22 to 24%.
This is where I introduce you to the cousin of the Magic of Compounding, which is called the Rule of 72. With the Rule of 72 you can calculate how long it will take you to double your money at any given rate of return. OK? Let’s take an example. If you're earning 12% on your money and you want to know how long it will take to double it (we're compounding, remember?) divide 72 by 12, and your answer is 6. It will take 6 years to double your money. Let’s do another one. If you're getting 6% on your money, divide 72 by 6 and you'll see that it will take 12 years to double. If you're getting 9%, it's 72 divided by 9, or 8 years to double up.
As for Warren Buffett, he's getting 22% on his money. This means you divide 72 by 22 and gee, in only 3.27 years, or every 3 years and 4 months, he doubles his money. Since he's been at it about 35 years with that $100 million he had to play with, he's doubled his original $100 million almost nine times. You get that by taking 35 years and dividing by a double every 3 years and 4 months. It equals 10.70, or let's go with nine doubles to adjust for a rate of compounding that is varying. The key point is he's not making 9 times his money with the $100 million, that would be an arithmetic progression that would give him $900 million. He's making nine doubles, a geometric or compounded progression.
Let's see how that works.
Warren Buffet's Geometric Progression Starting Dollar Amount: $100 million Time Periods Involved: Nine 3 year and 4 month periods
Period Time Taken
Starbucks employees are not just regular employees behind the average counter, they are Team Partners in charge of providing “Legendary Service” the millions of regular customers worldwide. In fact there are secret shoppers at Starbucks; did you know that? They do the ever feared “Snap Shot” where they judge the Team Partners to see if they are really “pouring their hearts into it.” Every Starbucks Team Partner knows that the next customer could be someone doing a surprise visit to check on the temperature of the coffee, the greeting to make sure it was in 30-seconds and even
This is where I introduce you to the cousin of the Magic of Compounding, which is called the Rule of 72. With the Rule of 72 you can calculate how long it will take you to double your money at any given rate of return. OK? Let’s take an example. If you're earning 12% on your money and you want to know how long it will take to double it (we're compounding, remember?) divide 72 by 12, and your answer is 6. It will take 6 years to double your money. Let’s do another one. If you're getting 6% on your money, divide 72 by 6 and you'll see that it will take 12 years to double. If you're getting 9%, it's 72 divided by 9, or 8 years to double up.
As for Warren Buffett, he's getting 22% on his money. This means you divide 72 by 22 and gee, in only 3.27 years, or every 3 years and 4 months, he doubles his money. Since he's been at it about 35 years with that $100 million he had to play with, he's doubled his original $100 million almost nine times. You get that by taking 35 years and dividing by a double every 3 years and 4 months. It equals 10.70, or let's go with nine doubles to adjust for a rate of compounding that is varying. The key point is he's not making 9 times his money with the $100 million, that would be an arithmetic progression that would give him $900 million. He's making nine doubles, a geometric or compounded progression.
Let's see how that works.
Warren Buffet's Geometric Progression Starting Dollar Amount: $100 million Time Periods Involved: Nine 3 year and 4 month periods
Period Time Taken
Amazon does it, so does ebay and hundreds of other online businesses – now brick and mortar stores are finding online feedback to be an incredible tool in quickly locating the products that perform well along with products that may need to be pulled from the shelf.By allowing customers the opportunity to provide instant feedback in product reviews companies are gaining a much better picture of consumer buying habits than simply waiting to see if consumers returned for a repeat purchase of a product.Online business is learning a great deal from customers as to pr
As for Warren Buffett, he's getting 22% on his money. This means you divide 72 by 22 and gee, in only 3.27 years, or every 3 years and 4 months, he doubles his money. Since he's been at it about 35 years with that $100 million he had to play with, he's doubled his original $100 million almost nine times. You get that by taking 35 years and dividing by a double every 3 years and 4 months. It equals 10.70, or let's go with nine doubles to adjust for a rate of compounding that is varying. The key point is he's not making 9 times his money with the $100 million, that would be an arithmetic progression that would give him $900 million. He's making nine doubles, a geometric or compounded progression.
Let's see how that works.
Warren Buffet's Geometric Progression Starting Dollar Amount: $100 million Time Periods Involved: Nine 3 year and 4 month periods
Period Time Taken
You're young, keen and 21. You may have just left training college or university. You feel you could rule the world and you have the answers to all the unasked questions. On top of that, you have an interview coming up soon, a permanent job on the horizon offering good pay, good perks and pretty good prospects. All that money and security, what more could anyone want as a starter?It is 15, maybe 20 years later and, yes, you did get that wonderful job which you had to accept, along with everything else that you found went with it: the perks, the pitfalls and the pension
Let's see how that works.
Warren Buffet's Geometric Progression Starting Dollar Amount: $100 million Time Periods Involved: Nine 3 year and 4 month periods
Period Time Taken Compounded Gain
0 Starting Point $100,000,000
1 3 years, 4 months later $200,000,000
2 6 years, 8 months later $400,000,000
3 10 years later $800,000,000
4 13 years, 4 months later $1,600,000,000
5 16 years, 8 months later $3,200,000,000
6 20 years later $6,400,000,000
7 23 years, 4 months later $12,800,000,000
8 26 years, 8 months later $25,600,000,000
9 30 years later $51,200,000,000
I believe Buffet is worth about $47 billion. It doesn't matter, he is somewhere in his ninth double. This is the magic of compounding! Also, he never sells. This means his money is doubling every three years and four months with no tax consequences. He gets taxed only when he sells. Under normal conditions, the money compounds until he dies, then it's taxed at a capital gains rate in the far distant future. In Buffett’s case, he’s giving most of his wealth to the Gates’ foundation to benefit society.
Teach your children to live a balanced life, and also help them master this concept and you will have very happy and very rich children. In stocks I show you how to make money at the bottom by buying depressed securities that are going to come right back, making you a fortune as they rocket off the bottom. In the future I will also show you how to make money with the Warren Buffet concept, or classical Graham and Dodd analysis. In the mean time, good luck with understanding the magic of compounding.
Start thinking exponentially, Make Money Now
Copyright 2006 Richard Stoyeck
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