Excerpt of Fortune In Your Cookies by Meena Cheng
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Here I was, sharing a simple, yet exquisite, meal with someone I love. I knew long after the meal was over, the memory of the evening would stay on.
For the next couple of hours, we leisurely polished off the bottle of Cabernet while we soaked up the silky sauce with our Italian bread.
Completely content and relaxed, our conversation meandered between work and family, politics and money. Down to the last half glass of wine, I asked Ronnie if she knew that the secret recipe to great wealth is encapsulated in her beef stew.
Ronnie looked puzzled.
I asked her, "Other than your enviable cooking skill, what do you think is the secret to this very enjoyable stew?"
"Hmm." She angled her head and thought for a bit. "Other than my very enviable cooking skill, I would say it's time, and lots of it. It's the only way a stew can develop its complex flavors and velvety texture."
"So there you have it!" I spread out my hand and spoke like a teacher who had been given the right answer by her students. "You said time is your secret ingredient in this beef stew; and time, unequivocally, is also the single most important ingredient in creating great wealth."
"You see, the way time can transform the most humble piece of meat into sheer rhapsody is the same way it can transform humble pennies into glorious dollars. In fact, how much money we will have in the future is directly proportional to the amount of time we allow our pennies to grow. Haven't you heard of Albert Einstein's eighth wonder of the world?"
"When was that added to the Seven Wonders of the World?" Ronnie asked.
"Only in the last hundred years," I replied with a straight face.
Ronnie arched her brow suspiciously and I continued, "Over time, when money is allowed to grow on top of money, enormous wealth will be created. This is called compound interest and Einstein calls it the eighth wonder."
"How enormous a wealth are we talking about?" I had her attention now.
"Millions and billions. With compound interest, $1,000 only needs to double itself ten times to become $1 million. Are you interested in knowing how that's done?"
"Oh, I am very interested," Ronnie said with a big grin. "But keep it simple because my life is already complicated enough."
"It's simple. Girl Scout's honor," I raised my right hand and said with much solemnity. "With compound interest, one dollar turns into two, two dollars turn into four, and four dollars turn into eight. This is how wealth is created and how ordinary folks like you and I have the chance to become millionaires. Do you remember the story we learned about the Indians selling the Manhattan Island to the Dutch for $24 back in 1626?"
"Vaguely." She looked sheepish.
I smiled. "Well, if the Indians had kept the $24 in a bank that paid 7.2% annual interest all these years, they would be millionaires many times over. How much do you think the $24 would have turned into by now?" Dulled by the food and wine she had consumed, Ronnie's mind wasn't at its prime to perform such a tedious calculation. So she offered a wild guess, "A couple thousand dollars?"
I sipped the wine and took my time to increase the dramatic effect.
"Ready for the answer?" I asked Ronnie. She nodded, and I gave her the answer. "After 370 plus years, the $24 would grow into over three trillion dollars."
Ronnie picked up a thumb-size breadcrumb lying on the table and threw it at me. It landed squarely on my cheek before it bounced neatly into my wineglass.
"Skye, I may not be Einstein, but even I can see that you're trying to pull my leg here," Ronnie laughed and said. "So, really, how much are we talking about?"
"I'm not pulling your leg," I said as I tried to fish the breadcrumb out of my wine. "The calculation is very simple and the theory is called the Rule of 72, which works like this: When you take the annual rate of an investment's return and divide it into the number 72, you get a number that tells you how many years it will take to double your investment."
Copyright 2001 by Meena Cheng. No part of this book may be reproduced without written permission from the author: firstname.lastname@example.org