If there’s one chapter that changes everything… It’s this one.

In Chapter 5 of How to Retire on $3K a Week, Bryce and Ben unpack the eighth wonder of the world: compounding and why understanding this single concept can transform the way you invest.

This is the chapter you return to whenever the headlines get noisy, the market feels shaky, or someone at a barbecue tells you property is dead.

P.S. Ready to build a plan the right way, once and for all?
Grab your copy of How to Retire on $3K a Week now! 👉 howtoretireon3k.com.au

Timestamps

  • 0:00 – Chapter 5: The Magic of Compounding
  • 0:34 – Why compounding should be tattooed on every investor’s wrist
  • 1:01 – Property investing is a decades game (not a years game)
  • 1:45 – Why this chapter was the hardest to condense
  • 2:22 – Vanguard & Cotality charts: “deliciously ugly”
  • 3:05 – Trend vs noise — and why the long game wins
  • 3:38 – Property as an inflation hedge powered by population growth
  • 4:18 – The 30-year chart: why 50% of returns happen in the last decade
  • 5:00 – The importance of not breaking the compounding “contract”
  • 5:40 – 6% vs 5.8% growth — why decimals matter
  • 6:10 – The Noel Whittaker spark: get something growing consistently
  • 6:32 – Wrapping up Part 1: Welcome to Base Camp
  • 7:10 – Next up: The Property Investment Formula

Transcript

Bryce
Alright folks, welcome back to the How to Retire on $3,000 per week podcast. I’m here with Ben. We are chatting about chapter five, which is the magic of compounding. Ben, now, this is what I want to say to you. I am not a tattoo guy. I don’t think it suits me. If I got one, I think I’d look stupid. But if I was gonna get a tattoo, Ben,

Ben
So you’re telling me off because I’ve got the big eagles on the back of my back.

Bryce
I thought it was a big lion?

Ben
Well, no. No.

Bryce
Of course you’re joking. Although I’m surprised you don’t have the 2010 and the 2023.

Ben
And the 2000 and then 57.

Bryce
Here we go. Okay. So I’ve opened up a can of worms. Hey, but if I did get a tattoo, Ben, yes, I think I’d put it on the inside of my wrist and I’d have the word compounding on it because it’s the eighth wonder of the world. It’s what that whole chapter was about. Yes. And it is, here’s the thing I want to let the listeners know as soon as the penny drops that property investing is a decades game, not a year’s game. my gosh. It opens up a world of joy, peace because you’re not gonna get caught up in the ups and downs of the market. You’re just gonna go, at the time of writing this book, we wrote it in 2024, so you go, I’m gonna check in in 2034, I’m gonna check in in 2044, I’m gonna check in in 2054. That’s the mindset and the frame that you need to have.

Ben
I remember when we were putting this part of the book together, you could almost put another sort of 20 or 30 pages in. We struggled in terms of condensing that down. If you think about the previous chapters about Y property and the importance of Y, they can be also bigger, but this is such an important part of the book. And it goes for obviously 20 or a page for a reason, because there is so much that we want to land, you know, in terms of the importance of the return that you’re getting and, you know, and optimizing your, when you are leveraging, all of these things come into play into here. And then to your point, letting the power of time do its thing. There is, there’s not a wasted page or a message in here. And it’s obviously magically supported by our supplemental charts that we’ve got also from Vanguard, so thank you Vanguard for approving that and also our friends at Cotality.

Bryce
At the time it was CoreLogic, but that’s why we CoreLogic in it, but it was. Now I’ve quickly turned to cotality. Hey folks, if you’re this early on, if there was ever a time to go and cut another lap or read another chapter, on. The amount of, whenever you’re wobbly, whenever you’re at a barbecue and someone says, what are you doing? Whenever you see a negative headline, if you just go and read this chapter again, because there’s a couple of things that I think. One is, One is you look at those charts that you just mentioned, and as our good friend Evan Lucas says, they are deliciously ugly. And why does he say deliciously ugly? Because most books have these beautiful hockey stick graphs. But when you actually look at what we’ve done, they’re ugly, they’re scary, and any one of those pullbacks, you could have got nervous. But if you zoom out and look at a long enough time horizon, it’s such a beautiful thing.

Ben
The trend is your friend, Bryce That’s what they say in investing. And if you think about the fundamentals of property from a compounding point of view, it’s a wonderful inflation hedge. It’s backed by population and economic growth that sort of brings it into this particular story. So if you buy well and select a town, region, city that’s growing and the economic pathway of that is growing, then ultimately the power of compound can be left to work its magic.

Bryce
OK. So as we round this chapter out Ben, there is a diagram on page 61 if you’ve got the book, if you’re in the supplemental PDF have a look. It talks about property over three decades. Yes. And it tells you what the percentage of the 30 year return has in each of the decades. Like you got to study that. Yeah. You’ve got to If you don’t really, don’t just go past that graph and move on. That’s got to land. Let it land because what it’s saying is over 50% your return will happen at the back end. It’s like a back-ended contract, Ben, for one of our beloved AFL players that sign up early just to get in to get the salary cap right at the beginning, but at the back of their career, they get a back-ended contract. It’s the same thing. means that the property is going to give you a back-ended return that if is, but you have to fulfill the contract, Ben, actually see that major benefit because if you get out early or you break your contract and you don’t stay in the game long enough you just don’t get that beautiful return that

Ben
And sometimes we hear people talking about 6 % and 5.8 and 7% those little things matter Because as you can see in that chart price you’re banking the dollars banking dollars your bank in the dollars So someone can say I got a 22% where my you know my value moved in a smaller decimal amount But when you’re getting a 53 % return on almost a million bucks, that’s material. It’s material so remember, you get to bank the dollars, and that’s the power of compound.

Bryce
Now Ben, you shouldn’t have favourite children, we’ve got two kids each and we shouldn’t declare. But this could possibly be one of my favourite chapters. I just reckon if you get… and that’s why we put it in nicely. That’s why when Noel Whitaker’s book, Make Money Simple, that’s when I read the compounding chapter in that book, that was, I just need to get something that continues to keep growing in a consistent way and let it compound. Game over. That was it.

Bryce
That’s it. I love it, Ben. So what we’ve actually done there is we’ve quickly wrapped up the first part of our book, which is the foundations. Part one. And if you have come this far in the book, we have really, you’ll notice that we’ve grabbed this analogy of ascending the mountain to the peak of Everest, Ben. Yes. So really what we’ve done here is we’ve got you to base camp. We’ve got you in the game, we’ve got you enough information so that you know what the goal is, you’ve got lifestyle by design, you’re defining the wealth and you’ve got the power of property. So the groundwork here is done. But we’re gonna move on to something that you and I are pretty excited about in the next part, which is the property investment formula. So you need to stick around for that.

Ben
If you’re going to play in the game, you’ve to know how the game’s played.

Bryce
Like what you’re doing there. So folks, if you’re playing along at home, hopefully you’ve got your copy of the book, How to Retire on $3,000 per week. The Property Couch’s playbook for passive property investing. If you haven’t, go to howtoretireon3k.com.au and there are all the details there. Audio books, book retailers, how to actually get on it. well, we don’t wanna linger too long on that, we, let’s move on to part two.