Compounding interest is the 8th wonder in the world. One who understands it, Earn it, One who don’t, pays it.
Albert Einstein once quoted this. And today in the world of capitalism, It has been resonated its echo more than ever before. Everyone of us want a good life. And for good life, one need to have sufficient financial backbone. Its a primary thing to survive in this modern times of civilisation.
Investment is one of the best way known today to have financial stability in our lives. There are countless sources on the internet right now which can describe this term which is coined by experts in investment sectors. Although its a kind of magic itself which can put us in nuts if we know its calculation along with time. But if investment is the topic on the table to discuss, We have to first give deliberate amount of time to discuss about learning and knowledge.
As per Elon musk strategy of working. We have to learn how we can apply “First principle thinking” on investment. Which means, Boil things down to the fundaments of it then start reasoning up from there. If we put it on investment, the fundamentals are
- Quality of Business,
Management includes group of all people who are working for the growth of particular company, assets means the physical or non-physical aspects company have which has potential to generate recurring income time to time. Liability means the physical or non physical aspects of the company which consumes resources in affect to compares operations. And products is any service or object for which company is stand to deliver. Quality of Business means Vision + Business Model, Finance means Allocation of Funding.
But what’s the best deal to learn all this aspects with depth ?
Reading quality books related to it. Which in itself an investment. Investment in knowledge.
The more effort one put into this knowledge variable, the scale of his growth chart has chances of exponantial amplification.
Even if we just take first fundamenta from the list. Management in itself contain collective threads of human diversity. Because management means nothing but guiding and handling group of individuals with diversified skills for parallel goals in front of them. If there is collective human beings, it means there is wide range of interest, beliefs, behaviours and pool of different talents come together. One has to learn all those aspects to understand and churn an optimum conclusion over it.
How do one can learn that all things about human behaviour together ?
By reading about it. Because its not possible for one person to taste and try all things by himself to experience. As warren buffet says, Man learn by only two things. Through mistakes and experiences. But not all the experience and mistakes should be your own. We have the power to learn from others, due to our brain mechanism.
Warren Buffet himself spends 8 hours a day in reading.
So before jump into investment of money, we have to dive into investment of knowledge. As Benjamin Franklin said, Investment in knowledge pays best interest.
Read as much as possible from various authentic sources to learn how to think. Once you have the compounding of knowledge, Compounding of money will like be play of your fingers.