The 8th Wonder of the World
Yes, Compound interest is known as the 8th wonder of the world
Compound Interest:
Compound interest is the interest on interest earned. It is calculated by multiplying the principal amount by the interest rate and then adding it to the principal. The new principal amount is then used to calculate the interest for the next period, and so on.
Compound interest can have a significant impact on your savings over time. For example, if you invest ₹100 at 10% compound interest for 50 years, your investment will grow to over ₹11,700. That’s a growth of over 11,700%,
Don’t focus on the money you earned but on the percentage of return you got
Formula for Compound Interest
The formula for compound interest :
A = P(1 + r/n)^n
Where:
- A is the final amount
- P is the principal amount
- r is the interest rate
- n is the number of compounding periods per year
- t is the number of years
Why is compound interest the 8th Wonder of the World?
Albert Einstein is credited with calling compound interest the 8th wonder of the world. He is quoted as saying:
“Compound interest is the most powerful force in the universe.”
Let’s say you invest ₹100 at 10% compound interest for 50 years. Here’s how your investment would grow:
As you can see, your investment would grow exponentially over time. This is the power of compound interest!
Conclusion :
Compound interest is a powerful tool to help you grow your savings over time. If you are looking to save for retirement, it is important to understand how compound interest works and to start investing as early as possible.
