The Most Powerful Force in the Universe: Compound Interest – Episode #7

Now that we’ve covered Inflation and Time it is important to bring Compound Interest into the mix, the most powerful force in the universe according to Albert Einstein.

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Posted in TWTBW, The Basics, Video, b3 | Comments
  • It's funny I remember that story, I believe, from elementary school, such a great story and lesson. Your mother was smart to teach it to you at such a young age. Hopefully you've adhered to the lesson and have been saving and compounding ever since!
  • Great episode. Keep it up.
  • That was a great episode Ethan.. Thanks!
  • Good work. Keep it up.
  • briceachang
    I'd love to hear from anyone who has other great tools out there to make things simple! I'm not sure what I'll do with all that "time" but then again -- I'm a computer science teacher/ web master/ tech support guru-- there is no such thing as time -- maybe I'll get around to inventing thrift savings plan a way to make a Pentium II go faster-- hmmmm.
  • Very nice information. Keep up the good work. Look forward to reading more from you in the future.
    visit my site www.orchardbank.com.
  • My mother created a compound interest MONSTER... We were say, VERY "fiscally challenged" growing up so money management was a necessity for survival. Things are not as rough these days but continued adherence to fiscal responsibility has absolutely helped me thrive over the years.

    Some lessons:
    1) Respect the dollar but don't be a slave to it (make money to live, don't live to make money)
    2) Pay yourself - (good call)
    3) Set financial goals (I want to have X $ saved by this time) and make a plan to get there
    4) Re-invest your dividends from stocks (compound your money)
    5) Celebrate your milestones. If you meet #3 - do something nice for yourself. It doesn't need to cost a lot... just do something for yourself.
    6) Be charitable -- help others, with your time and/or money. This pays intangible benefits...
    7) ... almost forgot but IMPORTANT -- live within your means! Don't live off of credit. Humans are lazy and credit (even now) is still too easy. Pay off your biggest interest debts and then only buy what you can afford to pay at the end of the month. Use a credit card for convenience, not for a bailout for a month or two... It's a trap! (http://i207.photobucket.com/albums/bb177/jedidu...)

    -Zombiebrainz
  • This is a great list. Thanks for sharing. These are all important but the most important one I believe for current day Americans is probably number 7.

    "There used to be a time that when you wanted something you saved for it. Then when you had saved enough money, you bought it; imagine that!" - John Bogel

    Cheers.

    Ethan
  • Hey Ethan -- I'm enjoying your podcasts (WSYK rocks too). The episode on compound interest was very good. This is a lesson my mother bestowed on me when I was quite young (back when interest rates were 11%). Anyhow - as I got myself edumakated -- I learned of a story about a King and a cobbler that really hit the compound interest story home for me. I thought I'd share with you and your loyal viewers... Here is a link to a version of the story: http://www.reallifedebt.com/the-kingdom-of-comp...

    Enjoy and keep up the good work!
    May health and wealth be with you!

    -Zombiebrainz
  • Hey there Zombiebrainz (nice handle), glad to hear your enjoying The Way to Build Wealth and WSYK!

    It's funny I remember that story, I believe, from elementary school, such a great story and lesson. Your mother was smart to teach it to you at such a young age. Hopefully you've adhered to the lesson and have been saving and compounding ever since!

    Keep the feedback coming.

    Cheers.

    Ethan
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