COMPOUND INTEREST – The 8th Wonder of the World……Albert Einstein

COMPOUND INTEREST – The 8th Wonder of the World……Albert Einstein

The investor’s best friend is compound interest. I never cease to be amazed by the power of compounding on an investment; watching pocket change become millions. There is nothing as powerful as a compound interest investment. It simply GROWS, and as interest continues to be added to interest, inexorably compounding on itself, investment growth is staggering. The compound interest investment is simple, low maintenance, less stressful, and often more economical (no broker fees, etc).

Compounding means that you can earn interest not only on your principal, but also the interest you have accumulated. Interest on interest!

Starting your investment program as early as possible makes a huge difference on how much wealth you accumulate; the benefit of starting to save early in life is greatly magnified by the phenomena of compound interest. With compound interest the growth of your investment is calculated not only on the amount of original and periodic investments, but also on the interest or dividends that have accumulated on the same investment. Interest on Interest!

Simply put, compound interest forces your investment to grow much faster . . . exponentially faster!

It’s simple. Put as much money as you can into a compound interest investment as early as possible, and contribute as often as possible, never removing your principal or interest until you have reached your investment objective. The compound interest investment – the ‘patient’ investment, the ‘quiet’ investment – will always come through for you; but you must give it time – you must give it a chance to grow. The compound interest investment is a simple low maintenance investment that has the additional important advantage of being stress-free, therefore being a healthier investment. And – very importantly – its growth is predictable, so you can confidently and securely plan your future.

Just put a little money aside – regularly – and let it compound!


To calculate compound interest use the ‘Rule of 72’. The Rule of 72 is simple: to find the number of years required to double your money at a given interest rate just divide the interest rate into 72. For example, if you want to know how long it will take to double your money at 6% just divide 72 by 6. At 6% interest it will take you 12 years to double your money.

Now run it backwards. If you want to double your money in 12 years just divide 72 by 12 to find that you will have to earn 6% on your money to double it in 12 years. At 6% you will double your money in 12 years.

Keep your investments as simple and trouble-free as possible. Invest your cash or Registered Plan funds (RRSP, TFSA, RRIF, RESP, etc) in compound interest accounts. Why suffer sleepless nights by gambling your hard-earned cash and Registered Savings and Registered Pension Plan funds in stressful high-maintenance costly stocks and mutual funds in which you stand a better chance of losing than winning? Invest, don’t speculate. Simply place your money in a steady growth compound interest investment; then enjoy yourself and let your money grow while you go about living.



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