Visualising The Extraordinary Power Of Compound Interest.
Updated: Nov 1, 2018
The power of compound interest is so compelling, that it’s been often called the “eighth wonder of the world”.
Find out why this concept is so fundamental to personal finance in the following infographic:
“Compound interest is the eighth wonder of the world. He who understands it, earns it... he who doesn't ... pays it.”
― Albert Einstein.
''My wealth has come from a combination of living in America, some lucky genes, and compound interest''.
― Warren Buffett.
Think you already know how to use and calculate compound interest?
WHAT IS COMPOUND INTEREST?
Simply put, it’s interest on interest.
In the first compounding period, that interest is small – but in the long run, interest on interest is a big deal!
How interest compounds depends on three variables:
Interest Rate: The rate earned from savings or an investment Time: The length of time money is left to compound Taxes: The timing of taxation can make a big difference
Source: Visual Cap.
''If you understand compound interest, you basically understand the universe''.
― Robert Breault.
''Understanding both the power of compound interest and the difficulty of getting it is the heart and soul of understanding a lot of things''.
― Charlie Munger.
''Knowledge and productivity are like compound interest. The more you know, the more you learn; the more you learn, the more you can do; the more you can do, the more the opportunity. I don't want to give you a rate, but it is a very high rate. Given two people with exactly the same ability, the one person who manages day in and day out to get in one more hour of thinking will be tremendously more productive over a lifetime''.
― Richard Hamming.
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