The smartest dude (Albert Einstein) in the history of man once said “The Most Powerful Force On Earth is Compound Interest”. Al knew his stuff when it came to numbers and his genius can also be applied to your retirement portfolio!

:48 – Gotta shovel?

Picture this: a wealthy business man, has asked you to come work for a month shoveling dirt. He’ll pay you one of two ways, your choice.

:40 -$5 Million can buy a lot of cheese

If you choose Option One, you get $5 million smackeroos! Not bad for a month’s worth of work.

:35 – A penny saved is a penny earned

Option Two is a little more complex. On your first day of work, you get a penny. On the second day, you get two pennies, and it doubles everyday thereafter until the end of the month.

:25 – Choose wisely Which will it be??? Option One: $5 million or Option Two: A penny that doubles everyday? If you chose the guaranteed $5 million, that’s fine. But if you would have chosen the Compounding Option (second one), you would have gotten over an extra $300,000 by day 30.

:11 – But wait! There’s more! If the month was July, you would have been able to make more than $10 million from the power of compounding interest! Now if we could just make that retirement portfolio double every year, we’d be set.

The Magic of Compounding Interest – Two Choices

Haven’t seen Episode 1 yet? Click here.

:60 – Achoo!

Compound interest grows like the flu spreads on Thanksgiving day (exponentially). In Episode 1, we talked about the power of compound interest in a hypothetical sense. Now, we are going to use a real life situation to drive the point home.

:48 - And Twins!

Meet the twin brothers: Smart and Ignorant. Each brother has a plan to retire, one is smarter, the other is not so much.

:41 – Partay?

The Ignorant Brother’s waits for the first 8 of his working years partying it up and buying stuff he doesn’t need. At year 9, he finally grows up and decides he better start saving for his future, so he saves $5,000 a year consistently from then on.

:28 – A Plan

The Smart Brother had a different plan, however. He decided to start saving money right away during his first 8 working years, then something terrible happened where he got disabled and couldn’t work to contribute to his retirement portfolio anymore.

:17 – Einstein

Fast forwarding to age 64, both of the brothers have a nice sum of cash to retire on.However, Smarty Pants ends up with about $50,000 morethan his not so smart bro!Oh, and by the way, Smarty did better than his bro by saving $120,000 less over his lifetimebecause his money had more time to grow.

Are you a believe it when you see it person?Check out the document below.