Authority figures, like professors who lecture without open discussion and politicians, don’t always deserve to be trusted. And from a consumer perspective, we have to resist the temptation to consider salespeople authority figures or experts. Salespeople can cleverly disguise themselves as advisers, and skepticism helps protect people from making poor financial decisions. Compound interest has essentially tripled (x2.65) your investment (principal).
Keep adding to the pot, and the compounding works even more in your favour. Social security is squarely based on what has been called the eighth wonder of the world—compound interest. A growing nation is the greatest Ponzi game ever contrived.
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QI was unable to find any support for the attachment to Einstein, and QI believes that it is very unlikely that Einstein made this remark. Being thankful for these opportunities is certainly one reason not to throw it away by making bad decisions with money. It may be difficult, but financial independence is within reach for anyone who wants it although there can be unavoidable external situations making it more difficult or impossible for some. But for at least those reading Consumerism Commentary, there should be enough opportunity to move towards financial independence.
- His breakthrough in the understanding of the physical universe came from his ability to imagine how the world might work, and then ask himself questions and solve problems to determine which theories could be tested.
- Salespeople can cleverly disguise themselves as advisers, and skepticism helps protect people from making poor financial decisions.
- In personal finance articles I frequently find quotes injected to attribute some further relevance to one’s position.
- Einstein also enjoyed the lack of a class system as was prevalent throughout Europe.
- There is a really cool tool here at Monevator, which allows you to see the effects.
The underlying wisdom of the adage derives from the power of compounding, what Albert Einstein called the eighth wonder of the world. (It is one of those attributed quotes, but it’s better coming from Einstein than anyone else, I suppose). This economic philosophy doesn’t have a direct relationship direct material inventory with money management, but I thought it was interesting to note. Because of individual freedom, cherished by Einstein, we are able to build wealth for ourselves.
Simple and compound both have advantages and disadvantages. However, Albert Einstein certainly had an opinion on the matter. Of course, if you lose money, in a given year, it’s what are functional expenses a guide to nonprofit accounting a very different story. Compound purists avoid losses like the plague, as we all should, and, most of the time, steer clear of cyclical sectors that can be prone to prolonged bear markets – unless they feel they can time them. That’s why compounding works well in conjunction with a diversified portfolio.
Albert Einstein’s Philosophies For Growing Wealth
At the suppressed interest rates of the 2008 to 2021 period, it’s a very different story. Savings left in cash at 0.1% would take 720 years to double. There is also a useful predictive tool which can tell you how long it will take for your money to double, assuming you compound at a certain rate. Invest just £2,150 every year at 7% and in fifty years you will have a million quid. But at the same rate over a fifteen year period to get to a million you would have to invest £33,800 – fifteen times as much.
Disdain for cult of personality
He didn’t like the militaristic nature of his schools, where pupils were not encouraged to ask questions, and learning was affected through rote memorization. The young Einstein had no interest in this type of training to blindly worship authority. He believed that humans were given brains so they could do much more than trust received knowledge unquestioningly. Albert Einstein was arguably one of the most brilliant thinkers in the twentieth century. Although being a genius in one genre doesn’t guarantee illumination is all other areas of thought, observers can adapt Einstein’s philosophies of life and his personality traits into better approaches to money management and life in general. Einstein might have more to offer today’s thinking saver than just compound interest.
It seems Einstein would not be too happy with the way people revere the most popular financial gurus. Fans of gurus will continue to stand up for their heroes despite displays of lack of character and lack of sense. Fans are invested in their heroes; to admit their guru isn’t perfect is to admit they wasted time, money, and energy. A superfan perceives an attack on Robert Kioysaki’s business practices or a criticism of his sales techniques as an attack on the man and his following. A criticism of Dave Ramsey’s approach to financial advice is dismissed without consideration; after all, he’s the successful author.
In some countries, if our parents were poor servants, we’d be poor servants, too, without any economic mobility. QI hypothesizes that the statement was crafted by an unknown advertising copy writer. Over the years it has been reassigned to famous people to make the comment sound more impressive and to encourage individuals to open bank accounts or purchase interest-bearing securities. Sometimes a comment is attributed to a famous individual to increase the prestige and believability of the comment. Also, a quotation from a famous person is often considered more interesting and entertaining.
Quote investigator also found some earlier quotes claiming that compound interest is the «greatest invention», but none of them involve Einstein in any traditional vs contribution margin income statement definition meanings differences way until well after his death. QI hypothesizes that an anonymous advertising copywriter initiated the idea that compound interest was the world’s greatest invention or man’s greatest invention. However, 1916 is not necessarily the origin of this hyperbolic statement, and future researchers may locate earlier citations.
