Compound Interest – The Eighth Wonder of the world

Compound Interest Is The Eighth Wonder of the World

It is always surprising to see how much compounding effects the end result when there are many enough years for compounding to really kick in.

Albert Einstein famously stated that Compound Interest is the eighth wonder of the world.

Example of using a compound interest calculator

There are many Compound Interest calculators out there. For this example let’s use the one behind this link.

Let’s assume an interest rate of 9% per year and an initial capital of 0 € and a monthly contribution of  10 € and let’s calculate what happens in 65 years.

So this example is for calculating what happens if you start saving up for your child at birth and the child continues with the same contribution until retirement age of 65 years.

The balance at the end is an amazing 455 036 € and only 7 800€ is the amount deposited by you and all the rest is interest.

Teaching your Children about Compound Interest

A good way to teach your kids about Compound Interest could be using coins or just show the below video explaining it.

 

 

 

 

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