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If you invest your capital at that rate for 10 times as long (50 years), you will not multiply your wealth by 16 times. Maurie Backman is a personal finance writer covering topics ranging from Social Security to credit cards to mortgages. She also has an editing background and has hosted personal finance podcasts. That’s why it’s in your best interest to start investing from as young an age as possible. And the longer you give yourself to benefit from it, the wealthier you stand to become.

• Like the slow tortoise, conservative investments beat out high flying “trendy” stocks.
• References continued to proliferate, but QI will stop the presentation here because the citations above provide a reasonable sample.
• There’s actually a name for this strategy.
• You’ll end up putting in $60,000 in that case, but you’ll only end up with $87,000.
• ”  I finally worked up an acceptable answer to this one, one I hoped would preserve my goal of presenting positive, optimistic views of science.

Sometimes a comment is attributed to a famous individual to increase the prestige and believability of the comment. Also, a quotation from a famous person is often considered more interesting and entertaining. Inaccurate attributions are readily propagated. The Ascent is a Motley Fool service that rates and reviews essential products for your everyday money matters. But watch what happens if you shrink your investment window to 10 years. You’ll end up putting in $60,000 in that case, but you’ll only end up with $87,000.

Albert Einstein Compound Interest Quote

This famous quote from Albert Einstein speaks to the significance of compound interest as a financial concept. Those are strong words from someone who most people consider a credible source on math-type stuff. In 1916 a character in an advertisement in a California newspaper called “compound interest” the “greatest invention the world has ever produced”.

This means it’ll take 12 years for your investment to double. The rule of 72 is a quick, easy way to calculate how long it will take for an investment to double based on the interest rate. Suppose you borrow $1000 on a credit card with an 18% annual interest rate.

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Amid the booming of cannon, the shrill whistling of a thousand steamers and the plaudits of great masses of citizens the Brooklyn Bridge . When asked to name the greatest invention in human history, Albert Einstein simply replied “compound interest.”

A Guide for your Financial Parenting Journey

Quote investigator also found some earlier quotes claiming that compound interest is the “greatest invention”, but none of them involve Einstein in any way until well after his death. Still, to us finance types, does everyone need to file an income tax return compound interest is still pretty darn powerful and noteworthy. The Eighth Wonder of the World—eighth in point of time, but first in point of significance was today dedicated to the use of the People.

People who understand compounding interest.

Over time, this process can turn a small amount of money into a big amount. With compound interest, your money grows, bit by bit. On top of that, he had a knack for simplifying complex concepts, making them understandable for all. Let’s dive into the magic of compound interest as viewed through the lens of Einstein. And yet, it’s a fundamental life skill with big impacts on one’s future.

This is the power of compound interest – your principal would accumulate with interest earned during the investment period, yielding more returns. The longer the investment period, the more you will benefit from compound interest. The power of compound interest, and the power of saving early. Strategies for teaching financial literacy.The power of compound interest, and the power of saving early.

That’s a BIG rate of return, but it keeps the numbers round. I should have STARTED with compound interest! I had taken it for granted that this room full of grown-ups understood what it means when we say, “compound interest is the most powerful force in the universe”. Even if they had been taught before, they really appreciated being taught again. Even with all that fanfare for the topic, I’ve been guilty of neglecting to properly cover when discussing financial literacy.

Einstein Said Compound Interest Is the 8th Wonder of the World. Why Graham Stephan Thinks That’s Right

I look forward to learning about the right financial tools to help build their future and set them up for success financially. We created his gifting page with Greatest Gift and shared it on the birthday evite. We received 12 gifts that will be going to his college fund and savings.Love this platform. For example, let’s say you have an interest rate of 6%.