Compound Interest

"Compound interest is the 8th wonder of the world. He who understands it, earns it. He who doesn't, pays it."

— Albert Einstein

For those unfamiliar with the term, here is an easy way to think about the power of compound interest: if you improve something by 1% every day for a year, by the end of that year, it will be more than 37 times what it started.

Here is an example of how that works: if a person starts with $100 and increases it by a total of 1% everyday for a year, the first day, a 1% increase would add $1. The second day, a 1% increase would add $1.01 ($100 + $1 = $101 and $101 x 1% = $1.01). The third day, a 1% increase would add $1.0201, and so on. Continue this for a year and by the end of it that $100 will have turned into $3,778. Don't believe it? See below. Compound interest works for more than just money -- things like knowledge, relationships, specific skills, and more. Remember Einstein's quote. Learn it and earn it.

Collect this post to permanently own it.
Subscribe to BLOG OF JAKE and never miss a post.
  • Loading comments...