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The Power of Compound Interest

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    The Power of Compound Interest

    I am sure some of you saw the Financial Tip of the Day post concerning Roth IRAs for kids. Well, the driving force behind that one was compound interest.

    Here is another example of that power. Scroll down after you think about it and see how close your guess is.....

    If Christopher Columbus had invested $0.01 (1 cent) when he arrived in the Americas (1492), never added any more $$ and earned 8% annually, how much would he have today?





    Answer is below......
















    $4.4 Quadrillion Dollars. That is 4,000 Trillion dollars, all from 1 penny.

    If you don’t believe me, put those numbers into any financial calculator or app. I promise I am correct.


    80% of financial success stems from the simple act of saving and not spending. The small remainder comes from how and where you invest.

    Good luck and I will post more if you like this type of info.
    Last edited by STGS; 10-25-2020, 07:36 PM.

    #2
    That is just crazy!

    Don’t think there is that much money on planet earth

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      #3
      Crazy for sure. I am 25 and trying to take as much advantage of it as i can!! Between my pension at work, maxing out a ROTH and putting into my 457 I’m hoping to be able to retire with no worries in 30 years. It sucks seeing it go out now and not having anything to show for it but will be well worth it in the future.

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        #4
        Sending this to my young, single, working daughter. She can be pretty tight-fisted with her money but we’ve trying to get her to be smart about it as well. Locking it away in an IRA is just as bad to her, I think, than not having it at all. Perhaps this analogy will make more sense to her.

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          #5
          He would have had to start over after 1929 more than likely

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            #6
            The most powerful force in the universe.....Albert Einstein![emoji383][emoji389][emoji383]

            Sent from my SM-N986U using Tapatalk

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              #7
              If CC had a penny it was counterfeit since pennies weren't invented for another 200 plus years.
              I take your point about compound interest. My favorite example is that for one 30 day month you can have 1pennie the first day and double it every day for the month or just take 100,000 dollars one time. Which offer do you take?

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                #8
                Originally posted by ra61hunting View Post
                If CC had a penny it was counterfeit since pennies weren't invented for another 200 plus years.
                I take your point about compound interest. My favorite example is that for one 30 day month you can have 1pennie the first day and double it every day for the month or just take 100,000 dollars one time. Which offer do you take?
                The penny every time. My rough math says 5.3 million and change on the 30th day.

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                  #9
                  Wow...impressive.

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                    #10
                    Now if only we can get someone to guarantee that equation with our investments......

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                      #11
                      Hypotheticals are awesome

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                        #12
                        How much is the time value of money and the rule of 72 taught in schools anymore?

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                          #13
                          Time is your friend. If I ever figure out how to live 600+ years, I'll invest a penny. LOL
                          8% compound interest is the kicker. There were a few years that it was easy to get that but with today's cheap money Federal Reserve Bank rates, sub 1% is much more common. When people can get thirty year mortgages in the mid 2% range, 8% is not realistic without big risk.

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                            #14
                            Originally posted by 60 Deluxe View Post
                            Time is your friend. If I ever figure out how to live 600+ years, I'll invest a penny. LOL
                            8% compound interest is the kicker. There were a few years that it was easy to get that but with today's cheap money Federal Reserve Bank rates, sub 1% is much more common. When people can get thirty year mortgages in the mid 2% range, 8% is not realistic without big risk.
                            I sure get the OP's point in regards to saving and totally agree.

                            However, with 30 trillion in debt (that we know of.... audit the Fed and it's probably double) 8% is a bit unrealistic.

                            If the Federal Money Fairy handed you a $100.00 per second it'll be 320 years before ya got a trillion. These a-holes in DC spend it like it's "found money." Which, to therm, I guess it is......

                            Sent from my LM-Q720 using Tapatalk

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                              #15
                              yeah in the last 2 decades you are actually losing money to inflation if you are in compounding interest vehicle.

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