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Albert Einstein Gave Us The Principle Of Compounding Interest
2021 Nov 19, 4:21am 443 views 17 comments
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1
Al_Sharpton_for_President
2021 Nov 19, 5:23am
Al_Sharpton_for_President
2021 Nov 19, 5:23am
The losses continue to pile up for hedge fund king Ray Dalio
https://fortune.com/2020/09/15/the-losses-continue-to-pile-up-for-hedge-fund-king-ray-dalio/
https://fortune.com/2020/09/15/the-losses-continue-to-pile-up-for-hedge-fund-king-ray-dalio/
2
TheAntiPanicanLearingCenter
2021 Nov 19, 5:52am
TheAntiPanicanLearingCenter
2021 Nov 19, 5:52am
ohomen171 says
I assure you that Einstein did not invent compound interest. He did call it the 8th wonder of the world, but it is a lot older than Einstein
Benjamin Franklin commented on compound interest but did not invent it, either. The Florentines used it in the Renaissance.
Babylon knew of compound interest, the OT had laws against it, Romans regulated it. Who knows about China and India.
Unbeknownst to many, Einstein made a foray into the world of finance and economics. He pioneered the concept of compounding interest. Let me give you a simple example as follows with a growth in the account of 10% per year:
I assure you that Einstein did not invent compound interest. He did call it the 8th wonder of the world, but it is a lot older than Einstein
Benjamin Franklin commented on compound interest but did not invent it, either. The Florentines used it in the Renaissance.
Babylon knew of compound interest, the OT had laws against it, Romans regulated it. Who knows about China and India.
3
clambo
2021 Nov 19, 6:56am
A nice thing about the compounding interest effect is it can apply to stock mutual funds or a stock which pays dividends.
I’m amazed at how my mutual funds have grown over the decades, and also my shares of AAPL.
I threw the dice and bought Apple stock which is now compounding the dividends.
Once I could see the breakdown of the gains in my mutual funds at T. Rowe Price. The portion of the return attributable to dividends reinvested was significant and surprising to me.
I’m amazed at how my mutual funds have grown over the decades, and also my shares of AAPL.
I threw the dice and bought Apple stock which is now compounding the dividends.
Once I could see the breakdown of the gains in my mutual funds at T. Rowe Price. The portion of the return attributable to dividends reinvested was significant and surprising to me.
4
Tenpoundbass
2021 Nov 19, 7:21am
Tenpoundbass
2021 Nov 19, 7:21am
CaptainHorsePaste says
Agreed everything you just said. I once saw a documentary on the History of economics. Einstein's name never even once came up.
And the concept of interest did go back to the middle ages. In fact it's so old of a concept, it's listed as a sin in the Quran.
I assure you that Einstein did not invent compound interest.
Agreed everything you just said. I once saw a documentary on the History of economics. Einstein's name never even once came up.
And the concept of interest did go back to the middle ages. In fact it's so old of a concept, it's listed as a sin in the Quran.
5
Tenpoundbass
2021 Nov 19, 7:45am
Tenpoundbass
2021 Nov 19, 7:45am
But did you know that the concept of putting your money in the bank came from the Crusades and the Knights Templar?
When they would go on the Crusade or missions, if they traveled with their money, they would be robbed and killed. So they gave money to folks on the Europe side, and they got a certificate. Then when they made it to the middle east they could redeem or withdraw the money as they needed it.
When they would go on the Crusade or missions, if they traveled with their money, they would be robbed and killed. So they gave money to folks on the Europe side, and they got a certificate. Then when they made it to the middle east they could redeem or withdraw the money as they needed it.
8
Tenpoundbass
2021 Nov 19, 9:51am
Tenpoundbass
2021 Nov 19, 9:51am
Also I remember in History class, our excellent History teacher we had. Explaining how White Europeans that came to the New World, as indentured servants, to pay for the passage. He said what was most difficult to finally get out of indentured servitude, was the compounded interest on their loan.
George Washington ran for President promising to forgive those loans. King George used to run attack ads calling him a Free Shit kook.
George Washington ran for President promising to forgive those loans. King George used to run attack ads calling him a Free Shit kook.
9
Patrick
2021 Nov 19, 10:05am
Patrick
2021 Nov 19, 10:05am
Tenpoundbass says
It was actually medieval Florence and Venice there the idea of getting interest on bank deposits really took off. The idea of compound interest has been known forever though.
So people would at first pay to deposit their gold and silver in a safe place, but the Italians realized that they could not only make the storage service free, but actually pay people interest to store their precious metals with them by lending out most of it and just keeping enough on hand to pay out the occasional withdrawals. This was the origin of fractional-reserve banking. And the origin of runs on the bank.
But did you know that the concept of putting your money in the bank came from the Crusades and the Knights Templar?
It was actually medieval Florence and Venice there the idea of getting interest on bank deposits really took off. The idea of compound interest has been known forever though.
So people would at first pay to deposit their gold and silver in a safe place, but the Italians realized that they could not only make the storage service free, but actually pay people interest to store their precious metals with them by lending out most of it and just keeping enough on hand to pay out the occasional withdrawals. This was the origin of fractional-reserve banking. And the origin of runs on the bank.
10
HeadSet
2021 Nov 19, 12:05pm
HeadSet
2021 Nov 19, 12:05pm
ohomen171 says
Hardly. If we have manned trips to the stars, it would have to be with physics that supersede Einstein in the same manner Einstein superseded Newton.
When we begin manned missions to the stars in 100 years or so, his principles will guide the whole endeavor.
Hardly. If we have manned trips to the stars, it would have to be with physics that supersede Einstein in the same manner Einstein superseded Newton.
11
Onvacation
2021 Nov 19, 12:09pm
Onvacation
2021 Nov 19, 12:09pm
ohomen171 says
What bank?
., if you put money in a savings account, you might get 2% in annual interest payments.
What bank?
12
HeadSet
2021 Nov 19, 12:11pm
HeadSet
2021 Nov 19, 12:11pm
Tenpoundbass says
For the Jamestown Colony (literally my backyard), the indentured term was limited to 7 years. That was true for both Blacks and Whites. Slavery evolved later.
Also I remember in History class, our excellent History teacher we had. Explaining how White Europeans that came to the New World, as indentured servants, to pay for the passage. He said what was most difficult to finally get out of indentured servitude, was the compounded interest on their loan.
For the Jamestown Colony (literally my backyard), the indentured term was limited to 7 years. That was true for both Blacks and Whites. Slavery evolved later.
14
HeadSet
2021 Nov 19, 12:50pm
HeadSet
2021 Nov 19, 12:50pm
Onvacation says
Yes, what bank? I'd have tons of money to move.
ohomen171 says., if you put money in a savings account, you might get 2% in annual interest payments.
What bank?
Yes, what bank? I'd have tons of money to move.
15
Misc
2021 Nov 20, 1:39pm
Compound interest is a fallacy. The system breaks down. This generally leads to wars.
As an example: say someone deposited 1 piece of gold 2000 years ago @ 2% interest.. Today the weight of that gold would be many times that of the entire planet. Obviously the system breaks down.
For debt based monetary systems it is even worse. For every unit of currency held, someone else is in debt for that unit. Let's say someone deposited $100 700 years ago @ 5% interest after inflation. That would force every other inhabitant of the planet to be in debt over $8 billion dollars each. At a certain point it forces people into slavery. This is why the Catholic church, back in the medieval times, killed people in horrendous ways for charging even a little bit of interest.
People of Western nations make fun of Muslim governments because about 80% of their educated populous pick "religious studies" as their major. They think Westerners are stupid beyond belief because we base our entire economy on compound interest. Something that cannot go on and must therefore cease sooner or later.
As an example: say someone deposited 1 piece of gold 2000 years ago @ 2% interest.. Today the weight of that gold would be many times that of the entire planet. Obviously the system breaks down.
For debt based monetary systems it is even worse. For every unit of currency held, someone else is in debt for that unit. Let's say someone deposited $100 700 years ago @ 5% interest after inflation. That would force every other inhabitant of the planet to be in debt over $8 billion dollars each. At a certain point it forces people into slavery. This is why the Catholic church, back in the medieval times, killed people in horrendous ways for charging even a little bit of interest.
People of Western nations make fun of Muslim governments because about 80% of their educated populous pick "religious studies" as their major. They think Westerners are stupid beyond belief because we base our entire economy on compound interest. Something that cannot go on and must therefore cease sooner or later.
17
KgK one
2021 Nov 20, 5:57pm
Most places pay .2%, ridiculous. Who pays 10%. Interst ,rate low but stocks high, housing high, so where to invest even of u borrow at low rate. This happened in 2005 time also.
Unbeknownst to many, Einstein made a foray into the world of finance and economics. He pioneered the concept of compounding interest. Let me give you a simple example as follows with a growth in the account of 10% per year:
2021: Account balance $100
Interest earned: $ 10
Ending balance: $110
2022 Ending balance: $121
2023 Ending balance: $133.18
2024 Ending balance: $146.41
2025 Ending balance: $161.05
2026 Ending balance: $177.16
2027 Ending balance: $194.88
2028 Ending balance: $216.32
In this theoretical exercise, you have doubled your money in 7 years. The real world is different. We have inflation. You might not be guaranteed a 10% average return each year unless you invest in a truly excellent mutual fund or have a brilliant fund manager like Ray Dalio handling your amount. You also might want to make contributions to the account each year. With all these variables you would need a very good computer program to predict the results. The principle still will work then.
In a country like the US, Canada, Spain, etc., if you put money in a savings account, you might get 2% in annual interest payments. A good fund manager can give you an average return of 10% a year. In inflation-ravaged countries, you must play an entirely different game.