The Power of Compound interest

By
Services for Real Estate Pros with INC Financial
Compound interest is the concept of adding accumulated interest back to the principal, so that interest is earned on interest from that moment on. The act of declaring interest to be principal is called compounding.
 
The power of compound interest is huge.  Take for example:

If the Native American tribe that accepted goods worth 60 guilders for the sale of Manhattan in 1626 had invested the money in a Dutch bank at 6.5% interest, compounded annually, then in 2005 their investment would be worth over €700 billion (around US $820 billion), more than the assessed value of the real estate in all five boroughs of New York City.

Wow that is a lot of money.  So you might not have been around in 1626.  I know I was not, but the concept is huge.  Albert Einstein supposedly said that compound interest was the greatest wonder of the universe.  If he did not say this he should have.  It is so powerful that the Roman government did not allow people to make loans this way.  They knew that if people mad a loan to another person that is would be hard to pay off. 

Now when you take a loan out at a bank they do not use the interest the same way.  But the right investments do use this concept.  It is for this reason that I tell people they need to invest at the same time as paying down the debt they have.  It is a fine balance, but one that can be measured and looked at.

If you would like to learn how to pay off all your debt and have at least $20,000 to $50,000 in tax free income in your golden years you should call me now.

In fact if you do not have debt and still want this type or money you should get a hold of me.  I can set up a plan for you so you can be free.

Have a great day.

Dave Cheatham

Trusted financial advisor

Dave has taught 1000's of people.  Take advantage of his knowledge in your own life.

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Comments (3)

Dave Woodson
Dave Woodson - Chesterton, IN
Not the Average Agent
Great one, Dave, I love that saying by Einstein
Dec 04, 2007 06:27 AM
Judy Greenberg
Compass - Long Grove, IL
Compass- Long Grove -Buffalo Grove

Happy New Year Dave- you're always one to count on for some great advice!

Jan 02, 2008 09:14 AM
Judy Greenberg
Compass - Long Grove, IL
Compass- Long Grove -Buffalo Grove

Happy New Year Dave- you're always one to count on for some great advice!

Jan 02, 2008 09:14 AM