The Joys of Compounding and Investments

Beowulf Capital

Compounding and Albert Einstein

Compound Interest is the Eighth Wonder of the World. He who understands it, earns it he who doesnt pays it.. --- Which side of the Boat are you On?

The Power of Compounding -Case Study One Mona Lisa

Francis I of France Paid Leonardo Da Vinci $20,000 USD for the Mona Lisa in 1540; Mona Lisa was Insured in 1962 for $100M -- $769M in Todays Money

Source: WEB Annual Letter 1962

If our Hammock Friends Ancestor Put $20,000 in a Bank with Interest of 6% (post tax) If it had been done, it would be worth $1 Quadrillion ($1,000 Trillion). That is Three Times the Wealth of the World

The Power of Compounding -- Case Study Two Christopher Columbus

Queen Isabella paid Christopher Columbus $30,000 for the Voyage in 1492!!!

If our Hammock Friends Ancestor Put $30,000 in a Bank with Interest of 4% (post tax) If it had been done, it would be worth $4 Trillion today If he had earned 6% ???? Source: WEB Annual Letter 1962

The Lessons from the Case Studies

Compounding is the Eighth Wonder of the World What were Key Factors that contributed to the Massive Wealth Creation Scenarios Above Long Periods at Low Rates of Compounding can Create Massive Amount of Wealth Alternatively, Shorter Compounding Periods at High Rates can Create Massive Amount of Wealth as Well However, a combination of Both can be very Beneficial We have no Expertise in Extending Human Life We Look for Investments that Compound at a Decent Rate for Long Periods of Time (5 Years +) Look at What the Value Creating Leopards are Doing Be Averse of Permanent Loss of Capital

Start Early and Compound Consistently

Value of a $1 Over 25 Years at Different Compounding Rates

40.0 35.0 30.0 25.0
Series 1

20.0 15.0 10.0 5.0 0.0

Year 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25

Series 2

Series 3
Series 4

Be Averse to Permanent Loss of Capital

Be Averse to Permanent Loss of Capital Anything Multiplied by Zero is Zero Beware of Leverage Understand Risk LTCM was a Hedge Fund Compounding at 40% Every Year Until it Exploded

40% X 40% X 40% X 40% X 40% X0 % = 0%

See what the Wealth Creators are Doing Example One Markel

Leopards Dont Change Spots Overnight

See what the Wealth Creators are Doing Example Two Berkshire

Leopards Dont Change Spots Overnight

Thank You Email Comments to: balajisridharan@beowulfcapital.com