Well, while you\u2019re paying off this debt you\u2019re missing out on extremely valuable time investing in the market. When we use the term \u201ccompound interest\u201d in the investing world, we\u2019re not really even usually talking about interest but rather the gains\/returns that we might receive from our investments. On the other hand, compound interest really does apply to when we\u2019re paying it because it\u2019s usually because we\u2019re working to pay off some massive debt.<\/p>\n
In personal finance articles I frequently find quotes injected to attribute some further relevance to one’s position. All investing involves risk including loss of principal. No strategy assures success or protects against loss. Look, here are 10 fantastic quotes from influential people and what they have to say about compounding interest. It saddens me to see such disregard for the future.<\/p>\n
Einstein didn\u2019t just say that it was pretty cool or good in some way; he said it was the most powerful force. Old Grandpa Rockerfeller the multi-millionaire who preached thrift said something I never forgot. He said, \u201cThe 8th wonder of the world is compound interest.\u201d Unfortunately very few people understand the magic of compound interest. Social security is squarely based on what has been called the eighth wonder of the world\u2014compound interest. A growing nation is the greatest Ponzi game ever contrived.<\/p>\n
If we need to consider more than one year, n will be equal to m multiplied by the number of years we consider. This is important because you need to be able to compare apples with apples. The only way to do this is if we can compare the annual amount of interest that will be earned given the amount of times interest is compounded.<\/p>\n
Thus, at the end of 10 years, you will have to repay a total of R8,235.05 (the principal of R5,000 plus the interest of R3,235.05). Still, to us finance types, compound interest is still pretty darn powerful and noteworthy. A recent Huffington Post story ran about a woman celebrating her 98th year as a customer of a local bank. June Greg’s father deposited $6.11 into her account 98 years ago, when she was only two years old. My colleague Conrad deAenlle also wrote about this money in the bank. Over the years, I’ve read Einstein quoted as saying that ‘compound interest was one of man’s greatest inventions’, or other variations on this theme.<\/p>\n