SAVING IS NOT OPTIONAL
Part 01 — First, understand compound interest
First, let's understand what all this about compound interest actually means. As a BizBuzz member we will learn and share each concept in much more depth; this first step only aims for you to be comfortable with the idea.
Let's not talk about 30 years, or 10 years. Let's think about 1 or 2 years to start. Let's understand what compound interest does in 1 year with your salary.
We'll take as an example that you get paid every two weeks. Without extra payments, vacations or bonuses: what can we do with 24 contributions? And let's compare contribution 1 with contribution 24.
Fair warning — you won't see anything here to fall in love with. You'll see something better: the truth, in small numbers.
Our contribution — our saving — will be USD 25 every two weeks.
Situation 1: absurdly revealing
If saving is not part of your life, tell me: 25 × 24 = USD 600 in just 1 year? From having an account where everything is already committed, to having another account you watch walking toward those USD 600… that is already a step.
Life rises every year: people talk about at least 2%, and in practice it's almost always more. Your USD 600 from January will be about USD 588 of power in December. None of this is exact: we're doing numbers to understand clearly.
In a savings account, the bank pays less than what life rises. Its security is that your money won't be stolen — or that you won't carry it in your pocket and spend it. Beyond that, it isn't much bigger.
How many millionaires do you know who have become wealthy by investing in savings accounts? I rest my case.
— ROBERT G. ALLEN
Author of Creating Wealth, a personal-finance classic
It is nothing other than putting money in ALWAYS — no matter the amount or the period —, earning interest with it, and that same interest becoming part of the new wave of investment.
Today we start with USD 25. Tomorrow — possibly tomorrow itself — those 25 can be a little more or a little less: it doesn't only go up, it also goes down. On a storm day it moves more. What matters is the end of the year.
And notice the comparison we promised: your first contribution works the whole year; contribution 24 has just arrived. Not all the money works the same amount of time.
An illustrative example assuming growth near 10% a year. This is not an investment promise: it's an explanation for academic purposes, so you can make your own decision and know that you can start, regardless of your income or your education level.
Year 2. You change nothing: the same USD 25 every two weeks. Except now we start from those USD 630 — and those 630 work the whole year, from day one.
“If year 1 ended at 630, year 2 ends at double.” Correct… if the money didn't work.
Out of your pocket, over two years: USD 1,200. The difference — about USD 120 — didn't come from you.
Above the photocopy. And above, for the first time, the rising cost of life.
The superpower, in one chart
In year 1, interest helped you with ≈ USD 30; in year 2, with ≈ USD 90. It tripled — without you contributing one dollar more. Because now it's not only your saving that works: what your saving already generated works too. Your first USD 25 contribution, untouched, is already worth ≈ USD 30.
The superpower doesn't show in the total; it shows in the difference. Whoever watches only the total gets bored and quits in year 1. Whoever watches the difference understands — and keeps going. That's why on our blog we come back to differences like this one, one by one.
Saving stops defending — and starts advancing.
The figures in this scenario use the same illustrative assumption as Year 1. They are not an investment promise: they are the explanation of how the concept works, in numbers.
Saving is not optional
Since we are fully focused on learning what matters today, we won't cover the why here. We're learning the hard part: the how.
At BizBuzz you will learn — just as easily as this short chat — to understand in the simplest way what an ETF is, why and how to buy one — as early as your second week of saving.
It's not noise. They're not promises. They are measurable, verifiable facts. It's how BizBuzz grows with you from the start — and if your level is higher, there's material at different levels.
A digital financial education company