#101 - Compound interest explained clearly

In this episode, Zeke and Oscar break down compound interest — the simplest concept in finance that most people still don’t understand. You’ll learn the difference between good compound interest (shares, ETFs, property, superannuation) and bad compound interest (credit cards, personal loans, and late fees that snowball into debt traps).

Using real calculations and case studies, they show how starting early can turn a few dollars a week into millions — and how ignoring it can cost you just as much.

📈 Topics covered:

• How compounding actually works — and why time matters more than money
• The difference between earning and paying compound interest
• Real-life examples using the MoneySmart calculator
• Credit card traps that compound against you
• How small spending habits kill your long-term growth
• Simple ways to automate good compounding through shares and ETFs

🎯 Whether you’re 20 and starting out or 40 and restructuring, this episode gives you a practical framework to make compound interest work for you, not against you.

🔗 Tools mentioned: MoneySmart Compound Interest Calculator

Chapters

• 0:00 Welcome, Disclaimer, And Setup
• 1:08 What Compound Interest Means
• 2:17 Positive Vs Negative Compounding
• 4:20 Daily Market Moves And Mindset
• 5:40 Assets That Work For You
• 6:40 Debt, Minimums, And Snowball Pain
• 8:18 Live Demos With MoneySmart
• 10:10 Start At 20 Vs Start At 30
• 12:40 Lump Sums, Uni Budgets, And $50 Weeks
• 15:20 Couples, Bigger Contributions, Bigger Outcomes
• 18:20 Lifestyle Spending Vs Future Wealth
• 21:00 Leverage, Property, And Big Wins
• 23:00 Fees, Consistency, And Common Mistakes
• 24:30 What’s Next: Leverage And First $100k
• 26:10 Closing Notes And CTA

Transcript

Zeke Guenthroth: 0:00

Welcome back to another episode of Finance Bible Podcast. Today we're going to be looking at compound interest, exploring everything around it. As you know, the last episode was saving, how to generate a baseline of savings. Today we're looking at compounding that into the next thing.

Oscar Don: 0:16

Today you'll learn more about what is good compound interest and what is bad. We're talking about investment, shares, ETFs versus credit cards, personal loans, and late fees, which a lot of people nowadays know too much about. So sit tight, relax, and enjoy the show.

Zeke Guenthroth: 0:41

Welcome back to another episode of the Finance Bible Podcast.

Oscar Don: 0:45

Zeke here and your co-host. But before we get into it, please note that nothing in this podcast should ever be considered as personal financial advice.

Zeke Guenthroth: 0:54

Although, if financial advice is what you are seeking, let us know we can get you in touch with the correct team.

Oscar Don: 0:59

But for now, sit back, relax, and enjoy the show.

Zeke Guenthroth: 1:02

Let's get into it. As you heard in the trailer, we're going to be jumping into compound interest today. So, first of all, simply put, let's define it. Right, let's jump straight into the definition. It's basically interest or growth on top of interest or growth. So I actually had to explain this to a good friend of mine the other day and how it works. You have your initial amount of money that you put in. Let's say $100. That $100, if it generates a 10% return or 10% interest rate, 10% growth, you then have, after a year, $110. Now, the next year you don't have $120. You don't get the 10% on your original amount again. You still get 10%, but now you get it on the new amount, the $110. Because you now have growth occurring on that extra $10 that you made last year. So now you have $121. Then the next year, that $121 grows as opposed to your original $100 again. You get those additional funds and so on and so on and so on.

Oscar Don: 2:12

And that is the positive compound interest. Now let's talk about the negative. You, everyone listening, you probably once in your life had a credit card or personal loan or even afterpay. But so for example, let's say you've got a thousand bucks on your credit card, which you haven't paid off, you are struggling to pay, and that compounds at 20%. So that compounds into 1.2 and then 1.44 and so on. So over time, you're actually owing more money because it's a negative compound interest because it's debt that you don't want. So it does go both ways. It can it can help you if you invest it and do it correctly, but it can also restrict you as well and actually put you further down the debt cycle and prevent you from actually growing your financials because it's it's a very important thing you need to take care of because it can make or break your financial goals.

Zeke Guenthroth: 3:06

It's literally exponential too. Like the numbers do not stop growing, it's just compounded. And obviously, as you're aware, the further it goes on, the further impact it has. So for example, if you originally had your $100, and now after 10 years you have, say, $400, then you now grow on the $400. You're making more already than what you were in year one, realistically. So it just goes and goes and goes and goes and goes. Never ending, or it's costing you that much. A wise young man. Yes, not very young actually, but he was wise when he was young at one point. Yes. Compound interest is the eighth wonder of the world. Those who understand it, earn it. Those who don't, pay it.

Oscar Don: 3:52

And a lot of people don't understand it. Probably 80% of the population, I reckon, don't understand compound interest. Exactly, yeah. And they just get themselves in crippling debt. And then once you're in crippling debt, mentality, it's a struggle. And then your financials, it's a struggle. So getting out of that is tough. But lucky you have us.

Zeke Guenthroth: 4:10

Yeah, and on that note, too, actually, explaining that for shares, because uh I actually got hit with this question from a client the other day. When you have funds invested in shares, for example, and you can see each day they go up 1% or down 0.3% and then up half a percent and so on. That figure is on the new figure daily. So if it's going up 10% in one day from $100 to 110, and then that day it goes down nine percent, you're gonna find it's gonna be similar to what it was originally because it's nine percent of a higher amount of money. And then the next day, just a new example here. So it's going up one percent, one percent, one percent three days in a row from one hundred dollars. It's not actually gonna be a hundred and three dollars because it's not three percent on a hundred each day. So on day one, it's on the hundred, on day two, it's now on the hundred and one, and then on day three, it's on the new amount, which would be like one oh two point something. And then it might drop.

Oscar Don: 5:07

Yeah. So And that's probably why as well, you shouldn't. If you do have shares invested, don't look at them every single day because you're gonna have good days and you're gonna have bad days, and you don't want that to, you know, make your overall day a horrible negative, you know, bad mood. So shares are always gonna go up and down, but overall, if you do it correctly, you you probably will be better off over the long term.

Zeke Guenthroth: 5:27

Exactly. And on on the positive and negative side of things, you can always take things from a from a negative and turn them into a positive. That's another one. It's not a man did say it is Amado Perez. So things that are working for you, what are they? Realistically, you've got shares, ETFs, property, superannuation, savings. It could be reinvesting dividends or rental income to get capital growth or to re-enter the market and dollar cost average.

Oscar Don: 5:56

And simply put, the earlier you start using these, you know, working for you parts, the less you need to contribute later on when you're 30, 40, 50. Now, let's talk about working against you, but I thought just before. So the main ones really are the credit cards, personal loans, and you know, late fees. These add up over time. And as mentioned just before with the 20% credit card interest rate, they will come from you, and all of a sudden you'll look at your credit card bill and you probably got another thousand, two thousand bucks that you now have to owe. So, so if you make the minimum repayments, you are compounding backwards. So, for example, $5,000 credit card debt at 910%. So that's around $11,000 in five years if ignored. So that's a lot of money. $11,000 in five years is a lot of money. And if you don't actually take it, take account of your credit card debt or just miss the repayments, good luck paying that $11,000 off before you actually start investing or saving.

Zeke Guenthroth: 6:56

It is crazy the level of snowball effect when it comes to compound interest. It's like if you if you eat shocking and don't exercise for five years, every day gets worse, obviously. And then when you start, every day's hard.

Oscar Don: 7:08

It's like when you start. Yeah, it's like you know, it takes you so long to get fit, and then you just can stop your fitness and stop your workout, and all of a sudden you just turn lazy and you know put on a bit of weight again.

Zeke Guenthroth: 7:20

Yeah, very hard to come back from that. And or if you're going the other way, 1% better every day, yeah. It's more than 365% better at a year because it compounds.

Oscar Don: 7:30

And with credit cards, like if you're in the process of actually applying for a credit card or you're excited for the prospect of it, because I was very excited back when I got my first credit card, you need to look at the interest rate because that is in the fine print. You probably don't look at it at the time when you do it because you're thinking to yourself you will be paying this off as soon as you spend it, like transferring back to your card. But I guarantee there'll be moments when you buy something and you can't necessarily afford it, so you put it on your credit card, and then over time that adds up because you haven't made the repayments, etc. So highly recommend looking in the fine print and just making sure you know, worst case scenario, if you were missing a couple of payments, will it affect you long term? Because that is you know the recipe for a disaster. It's make or break.

Zeke Guenthroth: 8:17

Big time. And what we're gonna do now is we're gonna spend the next five, ten minutes looking at actual studies, actual compounding, actual interest calculations or growth calculations, and figure out what actually occurs and how it works. So Oscar and I actually we've come up with a couple of different ones, and then we're gonna free ball and or freestyle.

Oscar Don: 8:39

And this is from the money's free ball. I was gonna say spitball, spitball free balls. Well, what is this? Uh yeah, money smart compound interest calculator. So we are using Money Smart Compound Interest Calculator. We mentioned this on our last episode when we were together. Highly recommend Money Smart. It is a fun activity, interactive tool you can you can play with. But I'll start here. So for example, I've done two scenarios which are very realistic and very achievable. So I have got an individual, they've just turned 20 years old and they want to slow down or retire at 60. So they have 40 years. They have $1,000 gifted to them and they put that into, let's say, an ETF, for example, or just for make it simple, the shares returning around 8%. So for this initial deposit of a thousand bucks, for the next 40 years, they only put in $100 per week, which is very achievable, especially if you're on a full-time wage. So fast forward 40 years, when they get to 60 years old, that balance is now $1.5 million. So just from interest alone, over the 40 years, they've made $1.3 mil just from interest.

Zeke Guenthroth: 10:03

So easy.

Oscar Don: 10:04

It's crazy, isn't it?

Zeke Guenthroth: 10:05

In year one, that would have been virtually nothing.

Oscar Don: 10:07

And year two, it would have been nothing. But over the long term, like imagine just sitting back, you know, you've automated your investments of a hundred bucks a week, and then yes, 40 years is a while away, but you hit 60 and you look into your shares and you're like, oh geez, thank you, 20-year-old me.

Zeke Guenthroth: 10:22

Yeah, I like to describe the graph when you're looking at this as like a swing set. So at the bottom, you know when you get like little two-year-olds on a swing and they're like at the very bottom, they're just going back and forth, like maybe one centimeter each way, or 10 centimetres each way. And then all of a sudden, when you start really getting that power behind it, it goes like nearly in a straight upward motion and can even then flip around the top if you're doing it powerfully enough. That's what this graph looks like. It's going very, very slow, no real change, and then all of a sudden there's a bang.

Oscar Don: 10:52

Yeah, let me tell you from year 25 onwards, that's when it really pushes up. So this one here, at age 60, 1.5 overall, interest gets you 1.3 alone, which is awesome. So let's flip a switch. Let's say you start learning about you know financials at your late 20s and you kind of want to get into shares or investing when you're 30. So let's delay this by 10 years and only have a 30-year timeline. So we're doing the same deposit of 100 bucks a week. We've got the same initial deposit of $1,000. But overall, when you are 60, as a not as opposed to 1.5 mil, you're only getting $656,000 all up. So you're almost losing $1 million just because you've delayed it 10 years. And number one, you had the total interest of 1.3, but with the alternative method delaying 10 years, you only got $500,000 of interest, which is a massive difference.

Zeke Guenthroth: 11:54

That's huge.

Oscar Don: 11:55

So just delaying your investing by 10 years can cost you almost a million dollars over the long term.

Zeke Guenthroth: 12:03

And these first two examples that Oscar and I are doing, they're going to be targeted at a younger demographic. Then we're going to go into the more stabilised cash flow heavy kind of, you know, your mum and dad, a couple of children, probably both working a job.

Oscar Don: 12:16

Yeah, these are for you know individuals who may still be in school or just finishing or trying to early 20s, mid-20s. They're life sorted in their 20s and 30s. So yes, $656,000 when you're 60 or for 30 years is still good. Like you're still making 500 grand from compound interest, but you could have made 1.3 mil from compound interest. So it's just 10 years is a long time, and in terms of monetary values, it's a big difference.

Zeke Guenthroth: 12:49

Exactly. And I'm going a similar thing, but a little bit different here. So we actually didn't discuss this prior, so it's a very interesting thing. Yeah, I have not seen your graph has a big spark at the end though. Probably step in the mile. The point of this one is I'm going to be talking about people who their parents either give them a lump sum at some point, like they might have been charging you rent or something, and then they give it back to you. It might be that you're in the unfortunate, fortunate position where you've had someone pass away and you've got a little bit of inheritance. You might get a gift from someone over many years and save it throughout zero to eighteen. Um it could even be that from zero to eighteen you're just saving while you're working or earning some money doing chores around the house and it built up over time. But we're just gonna say it built up to 15 grand or you've inherited 15 grand or whatever it is, whatever's happened. Okay? Because I know a lot of people in that scenario that have you know 15, 20 grand in their early years, like teenage in school, or even 20, 21. So we're gonna assume that you're going to uni and you don't really have a huge amount of income. So you're just throwing the 15 grand into something and you've got a $50 deposit weekly going in. You know, you might be doing two or three shifts a week at Maccas or something, and you still get your fund money. $50 a week is very terrible. Oh, yeah. Even if you're on yeah, like $50, 60 grand a year. Yeah, big time. We're running the same interest rate and everything, 8%, like at see the shares or something. But 40-year calculation, $50 a week, $15,000 initial deposit from the inheritance. So realistically, I just want to go straight to year 10 because we're gonna see that not much is actually really happening here. So you're now only at $72,000 after 10 years, which I mean that that is actually a lot more um than you would think because you put in $15,000 and then $50 a week for 10 years. And it's just because we're looking at the the end game there at the 40 years, which is a lot more. Yeah, correct. So after that 10-year period, your interest has nearly returned 32k. You've contributed your 15k initially, and then 26k by $50 a week over 10 years. If we fast forward that the whole way now, because as I said, the grass starts growing exponentially, like that swing, you get to a point where you've got 1.12 million in there after 40 years from only $50 a week. So that's not even assuming that you hit $25.30, $40, and you're on a proper income, you start bumping that up. That would make a huge change at that point in time and drastically grow it even further. But your interest then is one million of that. So you've only contributed $120,000 over 40 years. Very achievable. Now the alternative is just $100 a week instead of $50. So still very achievable. And the difference there is about $650,000, give or take. In terms of interest generated. But then if you go in terms of your deposits, that's another $104 grand because you're doubling it, the previous one was $104. So you get to just shy of $1.9 million from $100 a week and a $15 grand initial investment. So the point of me talking about that one is saying, hey, even with a very small amount of income, a very small amount of regular contribution, because per week everyone can do it, right? It's not much, $50 or $100. People spend $200 on a night out. Exactly. Which I'm going to get into. I've got a fun one to do there. But realistically, don't waste your inheritance, is what I'm saying here. Or if you've been put in a position where when you move out, your parents give you all the rent that you paid over the years to you to invest or you use as a home or something, then don't just go and blow it on a holiday. Don't go blow it on a new car. This can make a huge difference in your long-term life. And me saying don't blow it, again, not financial advice, but don't blow it. Don't do it. He's passionate. Now, as promised, we'll do something for the people that are more stable, you know, set up, maybe not our younger listeners. So if you're between probably 15 to 25, this may not apply to you too drastically, but it's going to, assuming you're you're lucky. Yes. You make the gauntlet through to that point in time. Let him know what numbers you're popping in, mate. That's okay. It's all part of the fun. So realistically, we know that as as you get older, you get higher wages, right? You have more time where you're working because you're not in school anymore, you've done your studies, you've probably gone to uni or trades college or whatever you've done, and you're now on a decent income. Right? So at that point in time, if it's you and a partner and you both have decent income, then you're probably able to do something like $400 a week. Because if you're doing a mortgage, guess what? It's gonna be more than that. It's gonna be $700, $800, $900, maybe a thousand, maybe twelve hundred per week. And we're gonna have a bit of a shorter time frame now because we're gonna be probably thirty years old. So we're gonna thirty years till we you know sixty. Yeah. Probably a reasonable time. And then what we're gonna do is two separate calculations. We're gonna say you have an initial deposit of 20 grand because you you're about 30 years old, is what we're gonna say here. You may be later, you may be earlier, depends on your scenario with your partner or your significant other. But let's say you've got a 20 grand initial deposit and you're doing $400 per week now invested. Over 30 years, you end up at $2.8 million. So that's $60, that's preservation aid, you can access your super, you can retire realistically. Initial deposit, $20,000. Over that 30-year period, your $400 per week is $624,000. $2.158 million of it is interest. Wow. $2.158 million from $400 a week between you and your partner, or if it's just you, $400 a week might be a bit difficult.

Oscar Don: 18:58

From nothing. Yeah, literally just for investing $400 a week. I know a lot of clients.

Zeke Guenthroth: 19:06

The alternative to that is what if you're on a bit higher income than this scenario? Okay. So you might be able to do between you and your partner again, $700 per week. You end up at $4.73 million. $3.6 million in interest. Just chilling.

Oscar Don: 19:25

Insane numbers, isn't it?

Zeke Guenthroth: 19:27

Yeah. So if you're not paying a mortgage, yeah, that's an easy way to do it. Or if you are and you've done it well, or you're renting or whatever, your rent might be lower than your mortgage. Like if you live in Sydney, for example, your rent might only be a thousand a week, um, as opposed to your mortgage being two or three.

Oscar Don: 19:42

It's just delayed gratification. Like, obviously, as you mentioned, for the first 10-15 years, not much is moving. Like you're probably looking at your account and being, you know, telling yourself, oh, why am I putting all this money in when I'm not getting that much back right now? But it feels slow at first, and then suddenly, from year 25 to 30 in this instance, it suddenly becomes rapid and the growth is real. So the early years to most people feel quite unrewarding, but they are crucial for building this over time. If your goal is using this money at six years old, these early years are absolutely crucial. And you have to remember that your long-term goal when you're actually you know grinding this out for the next 20 years or so, because there are going to be days when you're you're thinking to yourself, should I just pull this money out and spend this on a holiday? But you've got to dig deep and just remember that you've done the calculations yourself, you want to end up on the four million dollar mark, and that will make your mindset and your life a lot easier.

Zeke Guenthroth: 20:45

Exactly. And just to give you perspective, year one on this scenario, the one that gets you to 4.8 mil, is only 3,000 in interest generated. Year two is only 9,000 in interest generated. If we jump forward to year 15, it's 549,000 generated. So it goes up half a million in 15 years, and the difference from year one to two is six grand. The difference from year two to three is ten grand. The difference from three to four is about twelve grand. So it just grows and grows and grows, and then when you get to the very end, the difference between year twenty-nine and year thirty is about just shy of four hundred thousand in one year. So it deserves.

Oscar Don: 21:34

That's when the craziness comes into play.

Zeke Guenthroth: 21:36

Yeah, now there's two more calculations that I want to do. One of which, very simple. We're gonna do zero deposits, we're gonna have an interest rate of twenty percent, and we're gonna have an initial deposit of five thousand. Now you're probably thinking, what what what do you mean we're just gonna have a five thousand deposit, a twenty percent interest rate, and ten years of nothing occurring? Well, we're not talking about making money here. We're talking about you've got a credit card, it's owing 5k. As soon as you pop the 20% in, I knew exactly what was going on. There we go. 20% interest rate, which is about right. And a 10-year period. Realistically, guess what? Year one, all good. It only is $1,000 in interest. Wow. Year two. That's another thousand four hundred. And then as we go on and on and on, guess what? By year four, you've doubled your debt. You're now at eleven thousand instead of five. And if we go all the way to year ten, so you've just been making the minimum repayments, just hoping for the best. Guess what? You end up at a sum of thirty-six thousand dollars.

Oscar Don: 22:52

All from five grand. So you've literally added. You haven't added, you've erased thirty thousand dollars more. So that is the other side of compound interest and the negative side of why you need to not max out your credit cards and pay them back on time.

Zeke Guenthroth: 23:10

Yep. The final calculation is for our young listeners. This is gonna be fun.

Oscar Don: 23:17

I'm actually keen to look at this.

Zeke Guenthroth: 23:19

So let's just run through. I'm gonna get back to like my early 20s. Well, actually, maybe not like early, early 20s because I was very, very money savvy. Actually, there were some periods where I had some fun. Let's go, let's go uh U and I Primetime Rosebay 21. Right? Yeah. A week on drinks, what do you reckon? Maybe like 150. A week. I can do this do 200. 200 a week on drinks? Yeah. Although I don't I don't know if a lot of the listeners would hit 200 a week on drinks. Let's just say they go out every Saturday night. 200 if you are 200 on one night is normal, to be fair. I think it will I think it's actually quite cheap. Yeah, because a Jamison and coach 20 bucks on a night out nearly. You double the house. That's 40 in one sesh. You have at least 15. We're at 300. Yeah, you've got 200s. So we're now at 400, and then you've got food. I I always eat. I've been good with that lately, but back then I would love a little bit of food on the way. But probably 450 to 700 on a night out.

Oscar Don: 24:21

Yeah, right. So we're doing it. We're not yeah, we're not gonna do 700 on a night out. That is just insane. It's annoying. Hey, yeah, this is why we don't go out anymore.

Zeke Guenthroth: 24:30

Actually, that's ridiculous. Health and financials. Yeah, that's that's confirmed. So 200 on a night out, okay? So that's one week. And then you probably have let's change it to monthly. Let's make it real easy. So 200 a week on a night out. Let's say you only go out twice a month. So 400 a month. Subscriptions. Everyone would have Netflix. There's another 18 a month. Yeah, so we're at 418. What other subscriptions do people have?

Oscar Don: 24:56

They have Well, you've got your probably Amazon. You've got heaps. You've got Amazon, Disney, Netflix. I reckon you could do more than twenty bucks a month.

Zeke Guenthroth: 25:07

Oh, easily. I've given I'd do fifty bucks. And then you got Spotify as KO KO. Oh never at 490 because that's like I can round up to 500. I reckon that's that's a good number. So 500 just going out on subscriptions. What else do people to spend money on? Maybe a quick twenty bucks on sports better week, so maybe five eighty.

Oscar Don: 25:27

The booze, get some booze, but that's not out. Yeah, we'll include that in the takeaway food during the house.

Zeke Guenthroth: 25:32

Take away, yeah. Maybe just every Sunday they get Uber Eats. Yeah, 30, 50 bucks, yeah. So four times a month would be another 200. So 780. If any of these behaviours are sounding familiar, by the way, you're about to be in for a shock. What else do we have? Maybe what else do people do? A coffee every week. Your coffee, five bucks a day, five days a week, twenty-five, four weeks in a month. We're another hundred. So we're now at let's call it eight eighty, give or take. What else is there? Probably money or like you've got maybe a lunch at work once a week. Friday lunch. Friday lunch, yeah. 30 bucks. 30 bucks. So another 120 over the month, which gets us to 1000. Let's just give it a number to leave it at. That's a good number, nice and easy. And we're gonna say 30-year time period. I'm gonna say growing at 8%. Holy smart. This is a ridiculous figure. So this is what that spending per month could turn into if you just dial it down. Just dial it down. That's all it is. And we've got to run a conservative one as well for the those who are a bit more budget-friendly. Let's start off with a budget-friendly one. So if you're 500 a month on spending, guess what? You've lost seven hundred and forty-five grand in thirty years. Which is ridiculous. Five hundred and sixty-five thousand in interest, and over that thirty-year period you spent 180 grand on drinking, super gambling, gambling, and coffee, pretty much. That's just rough. That is tough. And that's not even like they're not even ridiculous.

Oscar Don: 27:13

I think this is a lot of people like I think this is like the normal. Yeah, this is probably like including us as well in this. Yeah, pretty much, yeah. Yeah.

Zeke Guenthroth: 27:21

Oh, to be fair, I don't have a coffee, but yeah, I've got more subscriptions. We did yesterday, and you had to chaos. And then we've got the proper method, the thousand a month, which is only 250 a week, mind you.

Oscar Don: 27:34

1.5 million nearly. That is what's that? 1.1 just in interest. Well, there you go.

Zeke Guenthroth: 27:45

Maybe think about their spending habits a little bit. And $5 coffee result.

Oscar Don: 27:49

Is it worth it?

Zeke Guenthroth: 27:50

Yeah.

Oscar Don: 27:51

Well, I look, I think it is. I drink coffee every morning, but that's that's because I like draw back on other expenses. I don't really go out much these days. Yeah, I didn't even throw the physical. There are just people come around or go for a walk.

Zeke Guenthroth: 28:02

I didn't even throw the gym or anything in there. That's a hundred a week for me straight away.

Oscar Don: 28:06

Yeah. Yeah, gyms are expensive.

Zeke Guenthroth: 28:09

Yeah, but the cost of going to the gym is cheaper than the cost of not going to the gym.

Oscar Don: 28:14

Yes. And if you go to the gym, you're probably more health conscious. You don't go out drinking as much. Yes. Yeah, it's very much well. There's pros to it all.

Zeke Guenthroth: 28:22

Yeah, yeah, that's right. And then if you throw for the older people, childcare and stuff on the case. Oh, child care, sounds ridiculous. Just children. 100,000 a year. Yeah. Especially when they get older and older. Yeah. But yeah, realistically, humans don't they don't think about exponential growth. They don't see the future. They don't think about delayed gratification. It's always now, now, now, now, now.

Oscar Don: 28:45

Yes, because we've got everything in front of us that everyone's like um everyone's attention span is just so swayed. No one wants to wait 40 years.

Zeke Guenthroth: 28:55

Yeah. I mean, you can get wealthy by working harder and by making more money, but guess what? It's easier to get wealthy by letting time do the heavy lifting.

Oscar Don: 29:03

And 50 bucks a week. Like, I don't know about you, but 50 bucks a week into shares, that is nothing compared to what you have like what else you spend 50 bucks on these days. So set and forget, and then all of a sudden, 30, 40 years time, you'll be faking yourself because it's actually so simple.

Zeke Guenthroth: 29:19

And this is literally just going into shares at 8%. This isn't talking about getting a property and leveraging and then having the compounding on that.

Oscar Don: 29:28

This is where diversifying your investments really sets the average from the wealthy. Like this, what sets them apart? Having these conversations, planning when you're younger, and you know, doing a bit of both because having diversification is the key. You don't want all your eggs in the one basket in case something happens. But expanding your investments is the way you can build your wealth up, and obviously speak to professionals to assist with that. So they're not just going blindly. But this is a great start.

Zeke Guenthroth: 29:58

Well, the first The fun news is if we're going to talk about compounding and leveraging and stuff like that. Just as a quick example, we had a client who well, two clients actually, because there's two properties that did it. But roughly 750k purchase price it was back in 2023, we're now 2025. Oh cool. They just got valued at $1.2 million, as you would have heard on the last podcast. And probably on our Instagram page, if you follow us. Confirmed. Now both of those clients did a 10% deposit, they bought the land separately, billed afterwards. So the actual entry cost was only $89,000 give or take, including all fees. Now, that equates to in two years a 500% return on their investment. So 60% capital growth, but 500% return on their investment in two years. 250% a year.

Oscar Don: 30:55

Wild. That is wild. That is good numbers doing that like that. That is ridiculous. I'm going to tell you about that. Yeah, we haven't actually calculated those. That's at least.

Zeke Guenthroth: 31:03

I just wanted to do that. So where does compound your cap? Superannuation, shares, property, debt, all of those different things. And realistically, there's a few mistakes to avoid, like, you know, ignoring the small amounts, like we mentioned, pulling out early.

Oscar Don: 31:17

Especially if you've got bills to pay, you might be thinking you want to pull it out, chasing the high returns under being consistent at 50 bucks a week or 100 bucks a week.

Zeke Guenthroth: 31:24

Yep.

Oscar Don: 31:24

Paying high fees that are road you're compounding and forgetting that you're reinvestment.

Zeke Guenthroth: 31:28

That's huge initially by the high fees in a road compounding. Like over the years, if you're getting charged a percentage-based fee, then guess what? As it compounds, you're getting charged more. Speak to a professional. Uh yes. So that's a speaker professional. Realistically, that's a good enough breakdown. Like, we can go further into more tips and stuff, but I think you get the point. Like, there's no need. Next week, what we're going to be talking about is very fun as well, very simple. We understand now that you've got savings. We understand now you've got compounding. So we're going to move into doing leveraging and also saving your first hundred K. So how do you save your first hundred K and then how do you leverage that? And take advantage of step one, saving. Step two, compounding. Step three, hundredk. Step four, leverage. And then we'll come back for one on superannuation, the power of salary sacrifice.

Oscar Don: 32:24

We do love personal world setup. That used to be our number one podcast as well back in the day, the uh superannuation explained. Yes, everyone loves super.

Zeke Guenthroth: 32:32

Yeah. But everyone, enjoy the episode. Do some calculations. Go to Money Smart. Get on the concurrent interest calculator. Have a fiddle. It's always good. And enjoy it. Catch you next time. Ciao. Dali. Well, that is the end of the episode. We hope you enjoyed it. And if you did, you know exactly what to do.

Oscar Don: 32:52

Hit that follow button, like button, subscribe, share it to your friends, families, or even a coworker.

Zeke Guenthroth: 32:58

If you're really feeling generous, you can send it off to an ex. But catch you next time. Hope you enjoyed it. DALLA.