Ep 29 - Investing and the Value of Time

Hey, everybody. Flip and Danny here, founders of the Freedom Real Estate Group family of companies. And welcome to another episode of our.

Podcast which is called Freedom through Passive Income.

That's right. And today's episode is entitled Investing and the Value of Time. Time, Time.

Oh my goodness. Somehow I kind of knew you were to do something like that. We've been married a long time.

Well, thanks a lot for that. So anyway, so we're going to talk about investing in the value time. And so this is you and I walked through this before we started this one. And I love this one. This is great. This is going to be eye opener for some people.

Yes, 100%. So we're going to talk about three definitions at the very top of it. The first one is inflation. So inflation is just in general increase in prices and the fall in the purchasing power of money. And we're going to give you a little bit of an example of that in just a moment. Moment. But the second definition is simple interest.

And this is something that we do, which is interest on your original contribution.

That's right. And we'll give you an example so you understand that better. And the last definition for this episode is compound interest, which is interest on interest.

I like compound. I like compound.

All right, Flip, you're going to give examples.

Yeah. So the simple interest, and so this is what many of our private lenders have done is a general contribution of $100,000.

Yep.

At 8% interest now it's typically at five years. And so the simple interest is 8% on that original contribution, which is $8,000 on the $100,000.

Yep.

And then, well, you multiply that by five and eight times five is 40. So at the end of five years, you will get back 100,000. $40,000.

That's right.

So $140,000. So you'll make $40,000 on that simple interest. All right, everybody, if you're watching on LinkedIn or Facebook or YouTube, this is your chance right now. I know you see the like button right here and you see the heart button right there. This is your chance in the video to postmash these buttons. Make sure you hit that heart button. Make sure you hit that like button if you like what you're seeing and if you, if you enjoy what you're watching. But this is your chance right now.

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Yeah. So again, then there's compound interest.

Yes.

And it's called compound because it's. It's more difficult. It should just be called difficult interest. So that $100,000, 8%, after that first year, you have $108,000.

Yes. Now, in this example, let's just clarify. You're going to compound annually.

Annually, yes.

Okay.

Yes. There's lots of variables. We're going to just use it. We're going to say annually. For the ease of this podcast, I.

Was about to say simplicity, please.

So at the end of the first year, you would have your $100,000 plus the 8%, which is $8,000. So at the end of year one, you have $108,000. Well, year two, you have $108,000 times 8%. So that adds another 8,640.

So at the end, because that was the definition Right now, that's where that ties in.

Interest on interest is interest on interest.

Exactly.

So at the end of year two, you have $116,640. Then another 8% on that total. Year three, another 8%. Year four, another 8%. Year five, 8%. And hopefully I'll be able to show you all these numbers because I'm cool. But at the end of five years, you're actually going to have $146,932.81. So the difference between simple and compound interest is $6,932.81. So it is. And that's just using simple numbers. Yes, but the more complex the numbers, the larger the numbers, the bigger that difference is between the two.

That's right. Because we could have compounded quarterly. Right?

Yes.

Which is actually something we might be doing in the future with our investments. And it's something that we want to educate people about because it's powerful. Simple interest versus compound interest.

Right.

And every dollar counts. Yeah. So when we talked earlier about inflation, I said we were going to give an example. So the dollar example is a dollar today is worth more than a dollar in the future. That's an example of inflation. What we had talked about.

Well, we were talking about like a bag of chips.

Yeah.

You know, I mean, 20 years ago. And I just. And that's just such a random number.

Yes.

But 20 years ago, bag of chips, 25 cents. Right. You'd be lucky to be able to buy a bag of chips today for 25. So a dollar today could buy four bags of chips back in the day. But today, that dollar, like I Said you'd be lucky to buy one bag of chips, let alone four. So it's just.

That's the perfect example.

And it's just using little potato chips. Come on. You know, there's so many other things as an example.

Yes.

Gas. Anyway, so. But time is literally money.

Yes. And that's really the example we're trying to. Every time somebody says time is money, you don't really think about it. They're being as literal, you know, as you can get, that statement. And it's powerful and something that we should all be thinking about. So money can only grow by investing. And delaying this investment journey is an opportunity lost. And I thank you. That that's the biggest takeaway of this episode is that so many times the money myth episode that we did, talking about when you're young, you think you have all this time, or why should I start saving now? Or I don't make enough to even put into savings all these little things. Every single day that you say something like that is a lost day and a lost opportunity. And in the example of compound interest, that was only five years, and we did the simplistic example of only compounding annually instead of quarterly or monthly. So there's just such power in time that every delay or day that you have indecision is, you know, just it's lost ability to increase this passive income that we all want to have in order to have freedom. So it's very much about figure out what makes you comfortable in taking action today. Because if you can take action today on $50,000 because you have 300, well, then that's. That's something. Right. We've talked to many doctors where they've got money sitting in the bank. It's losing value, but they don't know where else to put it. They don't know who to trust. And so it's just sitting there.

So. And they feel better that it's just sitting there instead of. Because they don't know.

Yeah, because they're scared. They're scared of not knowing what to do. That is a perfect example of just take $50,000 and say, I'm going to try this out. How many times have we given that example is that private money lenders do that for us all the time. Yeah.

So all I got is 50.

That's right. So just take action. No matter how small it is, take action. Because time is money. And that's. That's the truth. So we want to invite you to our social media groups.

That's right.

Come in and Listen to these private conversations that we're having. I'm going to start doing more videos. I'm going to ask my team, you know what, what we could do to start engaging and teaching and answering questions more in these groups. You can join us in Facebook and it's facebook.com groups. Freedom through a passive income. You'd also join us on LinkedIn just by searching in the search bar. Freedom through passive income. If you're watching the video, you're going to see some link on here. If you're on YouTube, you're gonna see it in the description. You can just go boom, click. Feel free to visit our website too. FreedomCapitalInvestments.com that's right. I always love to say love the videos. That's right. Not every little thing has a love button. LinkedIn has got claps hands. YouTube just has a thumbs up.

LinkedIn's got a heart. I think LinkedIn has a heart.

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That's right.

And we always like to end the episodes with Invest Smart, Live Happy.

Bye, everybody. Nothing in the show should be considered specific personal or professional advice. Please consult an appropriate tax, legal, real estate, financial or business professional for individualized advice. Opinions and information on the show are not guaranteed. All investment strategies have the potential for profit or loss.