Albert Einstein famously stated: “Compound interest is the eighth wonder of the world. He who understands it, earns it... he who doesn’t... pays it.
Forget about the Grand Canyon, Eiffel Tower or Taj Mahal, they don’t come close to approaching the true eighth wonder of the world. I’m referring to “compound interest”.
What Is Compound Interest?
It is the interest that is calculated on the outstanding principal plus the cumulative interest amounts from prior time periods.The magical feature is that the interest is also paid on the interest amounts you’ve already earned.
Compounding interest can create millionaires from average people.
The tired and overused excuse I hear over and over is that people think they don’t have enough money to make good money in the stock market. The truth is you don’t need that much!
Compounding interest can make you a millionaire, especially if you are young! Take the median income in the United States today: $50,000 a year. Now the average 25 year old making $50,000 a year would only need to save and invest 10% and would have a staggering $2,434,221 at 65!
This is just assuming conservative 10% returns in the stock market, and assuming he never gets a raise. The real results could be much greater!
The possibility of this is all due to compounding interest. By investing in companies that are growing– thus paying out increasingly more cash to shareholders, an initial investment could multiply many times over in the course of a long time span. Don’t underestimate this power.
The power of compounding is the Warren Buffett’s success factor.
Ask Warren Buffett for the single most powerful factor behind his investing success, and he’d respond “compound interest” — without skipping a beat.
He’s been preaching this for six decades, and it’s made him a billionaire. And it’s something every investor can copy.
Forget about the Grand Canyon, Eiffel Tower or Taj Mahal, they don’t come close to approaching the true eighth wonder of the world. I’m referring to “compound interest”.
What Is Compound Interest?
It is the interest that is calculated on the outstanding principal plus the cumulative interest amounts from prior time periods.The magical feature is that the interest is also paid on the interest amounts you’ve already earned.
Compounding interest can create millionaires from average people.
The tired and overused excuse I hear over and over is that people think they don’t have enough money to make good money in the stock market. The truth is you don’t need that much!
Compounding interest can make you a millionaire, especially if you are young! Take the median income in the United States today: $50,000 a year. Now the average 25 year old making $50,000 a year would only need to save and invest 10% and would have a staggering $2,434,221 at 65!
This is just assuming conservative 10% returns in the stock market, and assuming he never gets a raise. The real results could be much greater!
The possibility of this is all due to compounding interest. By investing in companies that are growing– thus paying out increasingly more cash to shareholders, an initial investment could multiply many times over in the course of a long time span. Don’t underestimate this power.
The power of compounding is the Warren Buffett’s success factor.
Ask Warren Buffett for the single most powerful factor behind his investing success, and he’d respond “compound interest” — without skipping a beat.
He’s been preaching this for six decades, and it’s made him a billionaire. And it’s something every investor can copy.
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