Eighth Wonder

Eighth Wonder

Eighth Wonder of the World
……………The Power of Compounding

Albert Einstein, arguably one of the most intelligent people who ever lived, was asked what he thought was the greatest of mankind’s discoveries. His answer: “compound interest.” He went so far as to call it the eighth wonder of the world.

As an example of just how powerful this can be, consider the following scenario.

Let’s say Christopher Columbus made an investment in the new world’s future in 1492. If Chris had placed 1 Paise in a 6% interest-bearing account and instructed someone to remove the interest every year, the value of the interest earned to date (2005) would be almost 31 Paise. Not too much to write home about, is it. But if the young explorer had placed the same paltry investment of one cent into the same interest-bearing account but LEFT the earned interest to compound—earning interest upon the interest—the results would be drastically different.

What would you guess the account would be worth now? INR10,000? INR100,000? One Lac? 10 Lacs ? 1 Crore?

In actuality, the resulting balance of 1 Paise invested at 6% COMPOUND interest for 513 years would be INR 95,919,936,112. That’s 95 BILLION!

Not bad for a single penny. Do you see what Al Einstein was so worked up about? It’s powerful. We may not have 513 years to make compound interest work for us, but we can employ it nonetheless.It doesn’t matter how old or young you are, you have to start now. Get the power and the momentum of compound interest working for you.