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Delayed Gratification- The Day After Tomorrow


Delayed gratification is a word disliked by many people. It means that you have to postponed buying or consuming something. This something is not a necessity like food but rather a luxury item that you could have done without.

However, it is the second most powerful phrase in finance only after compounding interest. Some may even argue that it is the most powerful, because without delayed gratification or postponing one's desire, there is no way compounding interest will work its magic.

Let's imagine that you want to buy a $30,000 new car that you feel you deserve after working for a few years. Warren Buffet wrote in his book that he thought long and hard before buying a car and his lasted a few decades. Why? If you take $30,000 and compound it by 30 years using 10%, this amount of money is used for investment instead and earns a staggering $0.5 million.

That is $500,000 if it was left alone to be invested. It makes you realise why Warren Buffet, the investment guru of our times, decided not to buy a new car and used his for so long. The logo of "I Love My Dad's Credit Card" is there because of a story I've heard from a relative which I'd share in the next post. Without delayed gratification, there is no compounding interest at work and there goes early retirement, comfortable retirement and you can be pretty sure you can forget about retirement altogether.

A person who lives for the here and now will be living like there isn't a day after tomorrow. The logo of "I Love My Dad's Credit Card" is there because of a story I've heard from a relative which I'd share in the next post and it relates to this story very well.

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