Instead, compound interest is the eighth wonder of the world because: “The real route to riches is to set aside a portion of your money and invest it, so that it compounds over many years. That’s how you will become wealthy while you sleep. That’s how you will make money your slave instead of being a slave to money.”
“He who understands it, earns it; he who doesn’t, pays it,” Albert Einstein reportedly said. The beauty of compound interest is that it allows you to earn interest on your interest – so that while you have to sweat to earn the money you initially invest, from then on your money works on your behalf.
Einstein’s 8th Wonder of the World. And this is where Albert Einstein comes into play. According to Einstein , “Compound interest is the eighth wonder of the world.
But Albert Einstein is not the brains behind the Rule of 72 , nor did he originate, or perhaps even utter, the quote. The Rule of 72 is a shortcut to estimate how long it will take an investment to double in value. “It lets you know that it will take about 9 years for an investment earning 8% interest to double.”
Compound Interest will make a deposit or loan grow at a faster rate than simple interest , which is interest calculated only on the principal amount. It’s because of this that your wealth can grow exponentially through compound interest , and why the idea of compounding returns is like putting your money to work for you .
Albert Einstein is reputed to have said, “Compound interest is the eighth wonder of the world . He who understands it, earns it; he who doesn’t, pays it.”
The strongest of these is the strong nuclear force , which is 100 times stronger than the electromagnetic force – the next strongest of the four forces. The strong nuclear force operates only within the nucleus of an atom and so is not experienced directly within everyday life.
Compound interest makes a sum of money grow at a faster rate than simple interest , because in addition to earning returns on the money you invest, you also earn returns on those returns at the end of every compounding period, which could be daily, monthly, quarterly or annually.
Warren Buffett compounded his wealth through a specific type of investment. Specifically, Buffett invests in: Shareholder-friendly businesses.
Albert Einstein, a well-known smart person, said “ Compound interest is the eighth wonder of the world . He who understands it earns it… he who doesn’t… pays it.” Or maybe it was Lincoln who said that.
It is generally agreed that the origin of compound interest can be traced back to the Old Babylonian period (ca. 2000–1600 BCE), because we know that the Babylonians called compound interest şibāt şibtim “interest on interest” in Akkadian, and even solved mathematical problems on it. See §3 below.
The first reference we have of the Rule of 72 comes from Luca Pacioli, a renowned Italian mathematician. He mentions the rule in his 1494 book Summa de arithmetica, geometria, proportioni et proportionalita (“Summary of Arithmetic, Geometry, Proportions, and Proportionality”).
The formula is simple: 72 / interest rate = years to double. Try plugging in various interest rates from the different accounts your money is in, from savings and money market accounts to index and mutual funds. For example, if your account earns: 1%, it will take 72 years for your money to double ( 72 / 1 = 72 )
The Rule of 72 is a quick, useful formula that is popularly used to estimate the number of years required to double the invested money at a given annual rate of return. Alternatively, it can compute the annual rate of compounded return from an investment given how many years it will take to double the investment.
There is an often-told story that when Albert Einstein was once asked what mankind’s greatest invention was, he replied: ” Compound interest .” There’s even one claim that Einstein called compound interest the “8th Wonder of the World.”