In the past, there were two big jokes in the market: one was telling the poor about compound interest; the other was telling the rich about inflation.

When it comes to compound interest, the most common saying is: compound interest is the eighth wonder of the world. Buffett earns so much money at an annual rate of 20% thanks to compound interest. In fact, this is all a lie to novices. I suffered deeply from it in the past. I have been thinking about it since I was in college, how much is the monthly salary, how much is the annual investment income, and compound interest is 20 Years later, you can retire early and live a happy life, which is wonderful just thinking about it.

In fact, the main reason why Buffett can make so much money is that he is an American. The United States is developing every year. He enjoys the dividends and a reasonable investment system. If you are in Afghanistan or Venezuela, then even Buffett cannot make long-term compound interest, and you will lose nothing.

For compound interest, you need two conditions. One is a complete and correct trading system. The second is a large amount of principal that cannot be used for a long time.

The formation of a trading system often requires the rational allocation of multiple investment varieties and multiple countries. Ordinary people simply do not have this ability. The most important thing is the principal. They can only save 30,000-50,000 yuan a year, and have almost no ability to resist risks. It is even more difficult to achieve long-term compound interest. If you happen to need the money to withdraw it when it is underestimated, compound interest will stop.

With a small capital, you can basically only allocate one or two varieties. When you encounter a black swan, you will lose everything. Rich people allocate multiple varieties. People can make money with fluctuations, and people can make money with economic development. When encountering a black swan, one variety will return to zero. , only a loss of 1%.

Don’t think about getting rich while working, and don’t think about compound interest on small funds. There are so many people who have made a fortune, but few of them have made a fortune by working, and many have made a fortune by investing, but none of them have made big money by relying on compound interest.

Big funds only make investments with high success rates and low yields. Only by using big money to make small money can you be constantly wealthy. Small funds can only make investments with average success rates and high yields. Only by using small amounts of money can you make a fortune.

If the direction is reversed, you will lose money steadily.

Compound interest can only be used for large funds, to do things with a high success rate, to bind social assets, and to wait for the assets to appreciate.

If you believe in compound interest and make money without running away, then you will be the only one showing off at the top of the mountain. The annual compound interest rate is 27%, ten times in ten years. But without a trading system, even if you open ten orders, let alone ten years, you may lose money steadily.

Those who master the ability to compound interest are rare, while those who master the ability to compound losses are everywhere.

Ordinary people take a bold gamble when encountering a bear market, and withdraw profits when encountering a bull market. The money earned belongs to them.