Bo Sanchez interview with Jo-en

Learn how compounding interest can work for you.

http://preacherinbluejeans.com/videos/20080124/jan-24-2008-.html

From the book "8 Secrets of the Truly Rich", Bo Sanchez wrote a story to explain how exponential income works and it goes like this...

Henry Hungry is applying for a job. He walks into this nice office and meets a well-dressed fellow behind the desk. Henry smiles and asks him, "Sir, is there a job here for me?" The man says, "I'm actually looking for a general manager. You need to sign a contract for three years. Interested?" "Hmm. Sorry for being upfront, but how much will I earn?" Henry Hungry asks. The man says, "I'll let you choose your salary. Do you want P30,000 a month or one centavo doubled every month?" Henry Hungry is mildly shocked by this unorthodox offer. "Run that by me again please", he says, getting his cell phone to calculate.

The man chuckles. "Option #1 is I pay you P30,000 a month for 36 months. Option #2 is I pay you one centavo on the first month and I double it every month for 36 months". Henry starts calculating. "Option #2 is interesting. If I choose that, I earn one centavo on the first month, two centavos on the second month, four centavos on the third month, eight centavos on the fourth month, 16 centavos on the fifth month, 32 centavos on the sixth month... after 12 months of working with you, I would have received a total of.. sheesh, P23! Sir, I need the money badly. I choose Option #1 where I earn P30,000 flat each month. By the first year, I'd already have earned P360,000. And after three years, that would total to P1 million. I definitely choose Option #1.

"Okay, if that's what you want." Then the man asks, "By the way, if you chose Option #2, do you know how much you'll earn by the end of three years?" "I didn't finishing computing that option. It's too depressing." The man calculates in front of Henry Hungry. "On the first month, you receive one centavo, on the second month, you receive two centavos... "He goes on and on, and Henry doesn't mind him too much. He's too focused on the P1 million he'll be earning in three years. He feels pretty good about himself. Finally, the man looks up and shows Henry Hungry the calculator. "In 36 month, you would have earned P680 Million. You exchanged that for one million. I'm sorry, my friend, I can't take you as my general manager. Your decision-making skills are terrible." The figure shows that Option #1 will just give him P1 million+ using P30,000 fixed amount in 36 months, and Option #2 will give him P680 million+ using exponential interest.

Being knowledgeable on how and where you will put your hard-earned money will bring you to financial freedom. Why do we need to work? to earn money to be able to support our daily financial needs, but how if for some reason we suddenly stop or unable to work? Being smart in handling your money will free up yourself from working over and over and over until you reach the age of 60. Have you imagined at the age of 60 you are still in the same situation as what you are now? Now, the choice will depend on us..