How to use small money to earn a big fortune?
By saving the money we spend on a daily cup of latte might seem like a small effort, but it can add up significantly over time and help us work toward our financial goals.
The idea originates from the “Latte Factor,” a concept popularized by financial author David Bach. The Latte Factor suggests that by cutting out small, unnecessary expenses and instead saving or investing that money, you could significantly improve your financial future.
For example: If we save the money we spend on a latte daily, let’s say RM 10, that’s RM 300 per month and we consistently invest this RM 300 per month into the investment tool which gives an average annual return of 8%, we could accumulate approximately RM 450,090 in 30 years. This demonstrates the power of compound interest over time.
Besides, this small habit cultivates financial discipline, helping us become more mindful of other spending habits.
The key to the Latte Factor is recognizing that small things can make a big difference. A Ringgit here, a Ringgit there, if Invested regularly through an automatic pay-yourself-first system, can make you financially secure for life.
In summary, what seems like a small, everyday expense can significantly contribute to long-term wealth. Again, the key is consistency, smart investing, and the power of compound interest, all of which can help us work towards achieving financial freedom, allowing us to retire early or pursue other life goals.
Source of reference:
Smart Women Finish Rich – David Bach
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