Albert Einstein: Compound Interest Wonder
on Saturday, March 25, 2017Albert Einstein Money Quote saying Compound interest is a fascinating thing that pays those smart enough to make use of it. Albert Einstein said:
“Compound interest is the eighth wonder of the world. He who understands it, earns it … he who doesn’t … pays it” — Albert Einstein
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In this quote, Einstein is expressing admiration for the power of compound interest. He refers to it as the “eighth wonder of the world”, suggesting it is as remarkable and impactful as the other famous Wonders of the World.
Einstein means that compound interest, where interest is earned on prior interest in addition to principal, has astonishing ability to generate returns over long periods of time.
His message is that those who take the time to understand how compound interest works will know how to earn it (such as by investing), whereas those who do not make the effort to comprehend it will end up paying it (for example, by taking out loans and paying interest).
In essence, Einstein is emphasizing the tremendous financial value and rewards that accrue to those who have insight into the mathematical magic of compounding returns over long time horizons.
Birthday: March 14, 1879 – Death: April 18, 1955