It’s a well-known fact that growth is present in all aspects of life, including finances. When you multiply 100 by 2, for example, you get 200.
If you repeat the process six more times, you will receive $12,800. That’s how much you’ll gain in seven years if you put $100 into a platform that doubles your money every year. This is what most people refer to as exponential growth.
The majority of people do not invest because they are unaware of exponential growth.
Let’s look at the three main reasons why people don’t get it.
People aren’t taught about exponential growth, thus they don’t know it. This was demonstrated during the beginning of the recent pandemic.
People were taken aback when 70 cases grew to 100,000 in just 67 days. They were even surprised when it took 11 days to reach 200,000 cases and 4 days to reach 300,000.
People were perplexed as to how this could have happened, but it was a clear case of exponential growth, which the common public could not comprehend.
The truth is that a substantial portion of the population lacks fundamental maths skills. They may believe they understand formulas, yet they are incapable of solving complex problems.
Even if the notion is taught at school, many people have not applied it in their adult lives. Adults prefer to discard what they don’t need, so the knowledge that isn’t used quickly vanishes.
There are several academic definitions of exponential growth, but it simply means that things continue to multiply. For example, if you put $2 into a project that doubled your money every year, after the first year you would have $4.
Instead of getting an additional $2 the second year, the $4 will be quadrupled, making it $8. This is already four times your initial investment, add another year and you have $16, and so on.
In chemistry, medicine, and finance, exponential growth is taught. It tries to predict something’s progress and what to expect in the future.
Four out of every five investors will reinvest. You will realise its potential once you have experienced exponential growth from your investments.
People learn the majority of things through experience because it forces them to internalise what they are doing.
You will make mistakes, but you will still learn from them. Investing is a skill that requires practice to master.
Many financial gurus will tell you that you can never truly understand exponential growth unless you invest and witness it for yourself.
People who have never seen the kind of returns you can get from these long-term investments have a hard time comprehending them and prefer to dismiss them. Consider the case of bitcoin.
People struggle to understand how big an investment can become because of its exponential growth. This is why experience is so valuable, it enables them to comprehend.
Exponential growth is often misunderstood by those who have never experienced it. Indeed, the world is filled with con artists, but there are also real investments to be made.
The top ten wealthiest investors are a group of intelligent people, some of them are outstanding mathematicians, but one man sticks out.
He is not the wealthiest of the group. He is the one with the most humble beginnings in the group. His name is Bruce Kovner, and he is the world’s seventh wealthiest investor.
He used to be a taxi driver. He supported himself by driving cabs while attending Harvard. When he graduated, he was still driving a cab, but he is now worth $6.2 billion.
Mr. Kovner is a macro trader and the founder of the hedge fund Caxton Associates. After 30 years as the company’s CEO, he retired in 2011.
This is what makes Kovner’s tale so fascinating, he began with nothing. He had nothing except his brains and is now a billionaire.
It is not necessary to invest a large sum of money at first. You can start small and work your way up, but if you don’t get started today, you may never catch up.
The best strategy to generate wealth with little money is to invest for the long term, which will lower the initial investment cost.
Debt is another reason why people may be hesitant to invest. Debtors rarely have the financial resources to invest. They neglect exponential growth because it isn’t in their immediate growth plan.
You may be thinking that you need to invest the same amount of money as the very wealthy, but keep in mind that Bruce Kovner was once a cab driver who started little. You don’t need to start big, all you need to do is start today.