![]() A lot of people have this on their t-shirt but have no clue what it means.Īnd if he said that compound interest is the 8th wonder of the world, we better take advantage of it. He who understands it, earns it… he who doesn’t… pays it.”Īnd Albert Einstein was a very smart man – so smart that he produced the world’s most famous equation: E = mc 2. ![]() That is why Albert Einstein stated: “Compound interest is the 8th wonder of the world. So if you added another $100 each year, you would have accumulated $6,300 in 20 years! In real life, we don’t usually invest a lump sum of money once in a lifetime, but we invest a part of the money we make annually. In the second year you have $110 and as you see in the following years the growth will speed up.Īnd when you go on to the year 20, you have already accumulated $672! Let’s say that you invest $100 and your money grows by 10% annually on average. This addition of interest to the principal is called compounding.” Here is Wikipedia’s definition of compounding: “Compound interest is interest added to the principal of a deposit or loan so that the added interest also earns interest from then on. If you don’t, then nothing will make sense, and the financial industry will always be able to take advantage of you. If you understand this concept, you will understand long-term investing, and, ultimately, wealth building, and you will have the power to win the financial game of life. Why am I telling you that? Because, in the world of investing, there is also a concept that rules all other investing concepts (sorry, I know that a magical investing ring would be more fun.) The Key Investing Concept So, whoever wore the One Ring, could control all the other leaders wearing lesser rings. The other, lesser rings, were linked to the power of the One Ring, and were dependent on it. Its creator forged it to gain control over the remaining 19 rings of power that were worn by the rulers of the different races appearing in the movie. The main plot of the series revolves around a magic ring that has an extraordinary amount of power. If you haven’t lived on the dark side of the moon for the last decade, you have probably heard of the movie trilogy, The Lord of the Rings.
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