Tuesday, May 24, 2011

The Magic of Compound Interest

Albert Einstein stated, "The most powerful force in the universe is compound interest." Being infinitely more brilliant than myself, Einstein knew that as simple of a concept compounding can be, applying it is extremely powerful.

Let me illustrate an example. Let's pretend I have an offer for you. The first, a million dollars from my left pocket. The second, a shiny penny from my right; however, that penny will double each day for thirty days. Which would you prefer to have at the end of the month? The one million dollars or the doubling-a-day penny?Most of us would opt for the million and why not; that's a logical choice. Let's see how the numbers unfold.

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