Albert Einstein once stated compound interest is the 8th wonder of the worldβ¦
The first lesson they teach you in finance class is this:
A dollar today is worth more than a dollar tomorrow.
This is due to what is known as βthe time value of money.β
Money has the ability to produce money.
And that money can produce money.
Albert Einstein took this idea seriously. π
Einstein clearly understood the power of compound interest.
And for us to be the best investors possible, we need to understand its power as well.
So here are 3 visuals to help us understand the power of compounding:
1. The power of one compounding stock β
2. Simple Interest vs Compound Interest π΅
3. The value of $1 by Age 65 π΄
The last image is perhaps the most shocking.
For a 20-year-old, every dollar invested could be $88 by 65 (10% return). At 30, your dollar is worth $23 invested (9% return). By 40, your dollar is still worth $7 by 65 (8% return). (Wow!!)
So whether you are 20, 40, or 60, these images should inspire you to do 1 thing:
Keep buying assets & stacking those dividends.
Dividendology
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