- Compounding works to your advantage as savings and investments grow over time
- Saving money is important because it helps protect you in the event of unforeseen circumstances
- The earlier you begin investing, the greater your potential return.
Nature is the greatest teacher. We quite so often tend to overlook the small nuances from our environment and the hidden lessons it can teach us. Today, being World Environment Day, let’s explore personal finance lessons that the environment can teach us.
Yes, you read that right! Nature can teach finance lessons as well! And we’re going to explore those lessons in a bit of a unique way. Here’s how our environment can inspire us in 3 words: the finance industry knows best—saving, investing and compounding.
Savings
Ahh, savings! The most difficult but the most rewarding habit to inculcate. Been there done that?If not, better late than never.
Have you observed an army of ants or a swarm of bees? They are all about storing food! You should watch the Ant Movie and the Bee Movie if you want a better idea of what we’re talking about.
Given the weather changes, they “save” every single time they consume what they have collected. So, in the future, they can be independent and handle adverse conditions.
Saving money is important because it helps protect you in case of emergencies. Additionally, saving money pays for large purchases, helps avoid debt, reduces your financial stress, and gives you a greater sense of financial freedom. Save, save, save and keep saving. It helps!
Investing
Our planet constantly reinvests in itself to multiply its capabilities and resources. Did you know?
Take groundwater for example, over hundreds of years, water is known to seep into the soil and collect in aquifers. This makes it one of the purest and richest freshwater resources available.
Coal is formed from plant materials that deposit as peat in swampy environments over centuries. The older it is, the more it matures and higher the value. Just like investments!
For coal and water to give back good value, the recurring deposits (rain and dead plants) mustn’t be compromised. Because when consumption (withdrawals) is more rapid than what the planet can generate (the year-on-year interest), the amount of resource (principal) left for consumption falls drastically until there’s nothing left to use from.
Invest early! The earlier you begin investing the greater your potential return. Also give ample time for your investments to mature. Don’t withdraw more than the interest generates. Else you’ll see yourself on the path to not -so-pleasant unforeseen circumstances. So keep calm and invest on!
Compounding
Talk about money and we’re all thinking of “compounding”. It’s a favorite mathematical concept to many because compounding has the power to multiply.
Take a look at our ecosystems, it comes together and adds shared value by multiplying impact with lesser efforts. It is fascinating to watch how elements were built to coexist and grow symbiotically. An interesting example
In a forest—a single tree binds the soil, homes and protects creatures, captures carbon dioxide from the atmosphere, provides food and shade for us and so much more. And it isn’t doing all of this
alone. The insects pollinate, the worms nourish the soil and plants keep the ecosystem in balance.
Overall, each little stakeholder comes together to compound their efforts by co-existing. Thereby multiplying and compounding their positive impact on our environment effortlessly.
Similarly, if you wish to earn more money, without putting in much effort? A simple way to accomplish this is “compounding”. Compounding works to your advantage as your savings and investments grow over time. All good to those who wait!
So, we can all agree by now that nature is our best teacher. Well, that being said, also do your part in taking care of your best teacher, will you? Every small effort you take to preserve the environment counts. Happy World Environment Day!
