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Wealth Building - Amazing Revelation About the AWESOME Power of Compound Interest

 


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I believe that the great Albert Einstein called compound interest the "Eighth Wonder of the World. " Einstein, of course was a brilliant man who reputedly had an IQ of somewhere above 175. (Normal IQ is around 100 to 110 with 140 being considered the start of the genius levels).

Einstein considered compound interest to be one of mankind's greatest inventions. For a person of the caliber of Einstein to say such a thing should make the rest of us sit up and take notice.

Allow me to give you a demonstration of the awesome effect of compound interest. Let's suppose I asked you to do a job for me. Don't concern yourself with what that might be. Let's just say that it was a job for which I offered you one of two methods of payment.

First, I offer you $1,000 cash now. Next, I say to you that I will invest $10 at ten percent per day for 60 days for you after which you can have whatever that amount is. You have to choose right now. Which payment would you choose?

Well, considering the title of this article you would probably say the second method. And you would be correct. Let's look at the first ten days:

  1. $10.00
  2. $11.00
  3. $12.10
  4. $13.31
  5. $14.64
  6. $16.10
  7. $17.71
  8. $19.48
  9. $21.42
  10. $23.56

Hmm, after 10 days it's not looking all that good is it? But the power of compound interest is that in the later days the numbers build greatly upon themselves. Let's look at the last ten days. That is, days 51 through to 60.

  1. $1,170.87
  2. $1,287.95
  3. $1,416.74
  4. $1,558.41
  5. $1,714.25
  6. $1,885.67
  7. $2,074.23
  8. $2,281.65
  9. $2,509.81
  10. $2,760.79

In the choice that I originally offered you the $1,000 mark was reached between days 39 and 40. The total at day 39 was $967.67 and the total at day 40 was 1,064.43. If you had chosen to take $1,000 cash at day one you would ultimately have been $1,760.79 worse off, albeit you would have had to wait 60 days to receive your money.

The point that I am making here is that YOU can take advantage of this compounding effect with your own investments. All you need to do is start as soon as possible and simply allow time to work its wonder. On the other hand, if you procrastinate and delay your investments all you are really doing is penalizing yourself.

The moral of this story is to INVEST EARLY. If it was good enough for Albert Einstein it should be good enough for you!

Gary Simpson operates the Turn Debt Into Wealth website. To discover how to create a PASSIVE income visit: "How to Save $1000's and Increase Your Net Wealth." You can also discover "How to Stop Wasting Your Life and Start Getting What You Want."

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