Compound Interest

“Compound interest is the 8th wonder of the world. He who understands it, earns it. He who doesn’t, pays it.”

— Albert Einstein

For those unfamiliar with the term, here is an easy way to think about the power of compound interest: if you improve something by 1% every day for a year, by the end of that year, it will be more than 37 times what it started.

Here is an example of how that works: if a person starts with $100 and increases it by a total of 1% everyday for a year, the first day, a 1% increase would add $1. The second day, a 1% increase would add $1.01 ($100 + $1 = $101 and $101 x 1% = $1.01). The third day, a 1% increase would add $1.0201, and so on. Continue this for a year and by the end of it that $100 will have turned into $3,778. Don’t believe it? See below. Compound interest works for more than just money — things like knowledge, relationships, specific skills, and more. Remember Einstein’s quote. Learn it and earn it.