The Most Important Lesson My Dad Taught Me.

This is the most important lesson I ever learned. 

This is the most important I ever learned. 

It’s Indian New Year today. So happy new year to you, or as we say, “Sal Mubarak”. 

What I wanted to do from now up until the New Year is really give you some fundamental key things about investing that I learned in my journey. 

I believe once we master the fundamentals the big results will always show up. It’s really all about perfecting the small pieces, because then the big machine just works. 

The first thing I want to start with is the biggest lesson I learned from my Dad. 

Picture this… 

Sitting in Burger King at the age of 12 sipping on a strawberry milkshake, eating a portion of the hottest fries at Lakeside Shopping centre in the UK. 

My Dad says “let me show you something”. Instantly my eyes roll, remember, I was always ahead of my time, so even at 12, my eyes rolled like a teenager! 

Anyway, I lean in and he’s got a Burger King tissue, flipped it over and drawn 3 columns. 

Month 
Amount 
Interest 

Month starts with 0, amount £10,000, interest £200 (2%) 

He says, you know how you see all these people, working to make money, I look around at the staff and reply “yes”. He says well, did you know “work” just doesn’t have to be done by humans, it can be done by money too. 

So I said “wait, you mean, instead of me going to work, my money can go to work for me too? Does that mean I can not go to work?” 

He said, well, let’s see… 

“If you have your money, this £10,000 make you 2% in month 1, how much do you have for month 2?” 

I said,”£10,200, but I spend more than £50 on going out each month with friends?… and another other £100 doesn’t even cover my Magic Circle membership & activities… I’m left with only £50?” 

Side-note: a lot of people don’t know, but I was part of the Young Magicians Club, a younger version of the Magic Circle! 

He said, “exactly, this is long term & that’s why you need to continue working, building income, but imagine if while you were working your money also was working? How much do you think the money you save can make you in 10 years?” 

I said “I don’t know, isn’t money supposed to be spent?” 

He looked and laughed – “Money is supposed to be invested.” 

He said, “if you continue this on, save money, have it earn you interest, earn more, have that more money earn you more… 

How much do you think your £10,000 will turn into?” 

To which I had a confused look on my face as I tried to work out some mental maths (which I’m terrible at!) and after looking confused for 45 seconds, I said (thinking I’d be somewhere close)… £47,000. 

He said, “that’s interesting, is that a lot of money?” 

To which I said, after carefully calculating what £47,000 would buy me as a 12 year old… “YES!” 

He said, “okay, so let’s get this straight, you work, your money that you earn gets invested, and makes you more money, do you think that’s a good deal?” 

I said “yes – I want to do that!” 

He smiled, gave me the tissue, and said – “when you get home, jump on your computer, open up Excel and work out how much your £10,000 will grow into in 10 years…” 

I said, “ok” – as any very super highly interested 12 year old does… Finished my milkshake and we left. 

About 3 days later, I found that tissue, and remembered the task, so I went to my computer, brought up excel…. 

Created 3 columns. 

“Month | Amount | Interest” 

And proceeded to put in the numbers… 

I expanded the rowrows down to 120 (10 years), expanded the Amount, Expanded the Interest. 

Scrolled all the way down to 120th row, looked at the “Amount” column. … 

And I was shocked. 

It said £107,651.63 not not £47,000. 

Then a lightbulb went off, this was money that was accumulated IN ADDITION to anything I was earning. This was just my money making MORE money. 

I ran to my Dad and said “I did what you told me, it st said “£170K!” 

He said “That, Minesh – is the the power of COMPOUND INTEREST. Thats what the richest people on the planet use so that they can make more money with the money they already made so that . If there’s anything you remember, remember to use compound interest, and you can never go wrong.” 

That was the most important lesson I ever learned about investing. That, using the power of compounding, my money that I earned wasn’t used up, it could make more with WITHOUT me working any mo more!! 

That was the start of my pursuit. 

Compounding is fundamental. It’s the very backbone of investing. 

Use it. 

The next lesson is out on Friday. 

Take Care, 

Minesh Bhindi 
wwwwww.GoldForLife.com 

P.S. Before I left, he said “Now, go add another Column, with “Additions” and just say, you added £100 per month on-top of the interest…” 

I rushed back to my computer… Put in the numbers… and and nearly fell off my chair!… 

I’ll let you work that one out for yourself on a spreadsheet…

1 Comment

Mark Flatt

December 30, 2012 at 7:21 am - Reply

A great story with a fantastic message Minesh. Thanks for sharing.

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