Compounding – The ultimate guide to growing wealth

The only way to grow wealth is to find compounding machines. However, you need to understand the power of compounding so as to maximise the benefits. My goal is to show you the best compounding machines. Further, I will share tools and templates to help with the investment decisions.

I advise that you find a quiet place and watch the video below from start to end. Trust me, it will open your mind about how you think about money!

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This will be a comprehensive guide over the next few weeks. I am a believer in the power of tiny actions after reading this excellent book.Therefore, this guide is broken into short and actionable lessons. Bookmark the link to the article. I plan to share more insights as time passes. So you don’t want to miss out!

Compounding Machine 1: Money Market Funds (MMF)

Money market funds are excellent compounding machines. Because of their importance in mastering the money game, I wrote detailed articles on them here and here.

Benefits of opening a money market account

  • Earn a higher return compared to savings accounts.
  • Access your investment within 1-3 days. Unlike a fixed deposit, there are no penalties for early withdrawal. Personal finance experts recommend at least 6 months worth of expenses saved in an emergency fund. Due to their liquidity, money market funds are a great place to save for emergencies.
  • The chances of losing your money are low as they invest in low risk and short term instruments.
  • Your money starts working for you. This is because interest earned is automatically reinvested each month. This is an example of compounding. At this point, I want to show you how small amounts can grow due to this compounding effect:
How compounding can grow tiny amounts into millions
How to use the power of compounding to grow your wealth

How to use and interpret the chart

  • The first green box in each row shows the number of years it will take to accumulate a million shillings. This is based on your monthly contributions and initial investment.
    • For example, if your kid’s education will cost Shs 1 million in 5 years time. Then start contributing Shs 15,000 each month.
  • The above illustrates the power of tiny amounts invested consistently.
    • For example, Shs 2,500 (minimum you can invest in the Sanlam MMF) will grow to Shs 1.5 million in the next 20 years. Therefore, time is your friend.
    • If you are in your 20’s and plan ahead today. Then a Shs 2,500 contribution would grow to over a million shillings by age 40!
    • One would need to double the contribution to Shs 5,000 (minimum you can invest in the CIC MMF) if they start in their 30’s.
  • Use the chart above to decide the initial amount and monthly contribution needed to achieve your target. Complete the preferred signed form between Sanlam and CIC. Then send the completed forms to nashthuo@gmail.com
  • For those with MMF accounts, the above is motivation that you are on the right path.

Future lessons on compounding

  • How to use the other compounding machines in Kenya to grow wealth.
  • YouTube video series on the power of compounding.Content will be exclusive to YouTube subscribers.
  • How to catch up with compounding if you didn’t start in your 20’s.
  • A story of my real life investing decisions.
  • Other insights as the series continues.
  • Can’t wait? Download the free audiobook and join the current lesson!

Other Valuable Guides

Here are links to other valuable content on this blog:

10 Personal Finance Basics

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28 Comments

  1. Samuel Gitimu says:

    Awesome information. I almost fell victim to an education policy broker a few weeks ago. Been eyeing CIC for some time now and will definitely use your signed docs. Already subscribed to your youtube channel.

  2. Hey Nash,
    Your channel is now on 1.5K plus, can I receive the free template? I wanted to review it and shout you out on my channel.

  3. Nash could I get the template please? I see you have already surpassed 1k subscribers, but I have subscribed too. I had already opened an MMF account. Resent this comment because this has my correct email. Thanks

  4. Nash could I get the template please? I see you have already surpassed 1k subscribers, but I have subscribed too. I had already opened an MMF account.

  5. Wish I had known this before
    Very informative.

  6. Nash. Kindly send me that compounding template to my mail. I have subscribed.

  7. Kavumbi Kalume says:

    Hi Nash, you already got to the 1k subscribers on YouTube. We(your followers) are still waiting for the free compounding template😀

  8. Great article!

    A quick question,

    The management fee p.a is charged on what amount? is it the amount invested, the interest earned or the total value of the fund?

  9. Hi
    can I get your template…

  10. Hey, assuming i have got a loan of 100,000 to invest all and plans to pay a 1000 monthly saving from salary,when i can withdraw my money having hit a million? 36 years now.

  11. Hi Nash! I’m also waiting for the template 😊

    My question is, is a Money Market Fund the only compounding machine available? What others are there?

    1. All readers who opened MMF accounts with my signed forms will get a free PDF compounding report! I didn’t see you there.However, if the YouTube channel gets to 1K then the editable template if free for all to use.

    2. Other compounding machines although are:

      Those automated i.e. Monthly compounding- other unit trusts such as equity and balanced funds. Global index funds. Money Market Funds, Sacco shares and deposits in certain saccos

      Those not automated – ad hoc compounding that you need to initiate yourself. Most are not monthly in nature – Dividend Stocks, Treasury Bills and Bonds

    1. Thank you very much for the great feedback! It keeps me going as it let’s me know that I am making a difference 🙂

      I have added you to the mailing list. You should get a welcome email which has detailed step by step instructions and the latest signed forms. Feel free to forward the welcome email with family and friends so they can also benefit from the free knowledge 🙂

  12. Gillian Wambui Waceke says:

    Thanks this is great,

  13. Fredrick Odera says:

    How can i contact Nash Thuo in order yo get a more clear insight on MMF

  14. Dan Ngari says:

    I couldn’t ask for more..onto that milli 🤑

  15. Thank you, this is great. Cant wait you reach your target coz some meet criteria 2 but not one. We hav opened.

  16. Thanx. This is great. Hop u reach the 1000 coz iv subcribed on you tube but can’t meet criteria one coz already opened.

    1. You’ve done your part… If the other numerous readers also hit subscribe on YouTube then the target will be achieved and all enjoy the valuable template for free 😉