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. A. operating activities definition and meaning Michael Lipper, president of Lipper Analytical Securities Corp., quotes Albert Einstein’s remark that “The eighth wonder of the world is compound interest.” If you can invest at a sure 7 percent return, your money will double in 10 years. If you are patient, and stick with your investments over time, you will almost always come out ahead.
In some countries, if our parents were poor servants, we’d be poor servants, too, without any economic mobility. Despite his initial problems with the regimented style of school, Einstein strongly valued the cognitive skills he gained from his later studies. He cited a good college education with providing the type of cognitive skills that allows people to think for themselves and imagine possibilities that have never been imagined. “The value of a college education is not the learning of many facts but the training of the mind to think,” Einstein was quoted in the New York Times in 1921. There is no question that Einstein enjoyed the personal freedom to succeed in the United States afforded by the country’s capitalist underpinnings. It seems Einstein would not be too happy with the way people revere the most popular financial gurus.
Compound Interest Is Man’s Greatest Invention
For Einstein, advanced education is not job training, but training to perform at high levels in any situation, job or otherwise. This agrees with my view on education, with its worth being measured in more than just financial return on investment. Would Einstein feel the same way now, with a college education costing several multiples more than it did in his time, even after taking inflation into account? He clearly sees the importance of cognitive ability and education for growing human capital, which has a positive effect on options for long-term wealth. This economic philosophy doesn’t have a direct relationship 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.
Albert Einstein’s Philosophies For Growing Wealth
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 lost or misplaced your ein 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. He might have; the sentiment matches what seems to be this particular genius’s sense of humor.
- Einstein might have more to offer today’s thinking saver than just compound interest.
- Quote investigator also found some earlier quotes claiming that compound interest is the “greatest invention”, but none of them involve Einstein in any way until well after his death.
- Whether he said these words or something similar is relevant only to purists who say serious journalists shouldn’t attribute quotes willy-nilly to emphasize their importance.
- He clearly sees the importance of cognitive ability and education for growing human capital, which has a positive effect on options for long-term wealth.
- Salespeople can cleverly disguise themselves as advisers, and skepticism helps protect people from making poor financial decisions.
With that being said, risk tolerance should always be considered with higher interest rates; a higher rate of return generally comes with additional risk. For savers, it means earning interest on your original principal—plus on the interest your investment generates. zoho books review – accounting software features Compound interest is sometimes described as “interest on interest” because earned interest essentially gets added to the principal over time. Savings vehicles such as certificates of deposit typically pay compound interest.
The Importance of Investing Early to Earn Interest
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. Whether he said these words or something similar is relevant only to purists who say serious journalists shouldn’t attribute quotes willy-nilly to emphasize their importance. It doesn’t change the fact that compound interest should be on the mind of anyone looking to build wealth over time. QI hypothesizes that an anonymous advertising copywriter initiated the idea that compound interest was the world’s greatest invention or man’s greatest invention.
How long will it take to double your money at 2% interest?
In 1916 a character in an advertisement in a California newspaper called “compound interest” the “greatest invention the world has ever produced”. Many homeowners who have struggled to meet their mortgages month after month, only to find after years of making payments that most of their money has gone to cover interest charges, have felt like cursing whoever came up with the concept of compound interest. 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.