Albert Einstein said compound interest is the 8th wonder of the world. You might know compound interest means your interest is earning interest, e.g. if you have $100 and it earns 10% interest a year, after 1 year you will have $100 * 110% = $110, and after 2 years you will have $110 * 110% = $121, etc. But do you also know the following facts?
Rule Of 72
“Rule of 72” is a simple way to determine how long it takes for an investment to double its value. You can divide 72 by the expected annual return to get the estimated years. E.g. if your annual return is 4%, it takes 72/4 = 18 years to double your investment. If your annual return is 8%, it only takes 72/8 = 9 years!
Cost Also Compounds
There is a lot of emphasis on the compounding of investment, how money grows with compound interest, and how wonderful it is. But, you should also take note that on the other hand, cost also compounds! If you spend 1% extra per year on transaction fees or management fees, that is 1% less invested and it grows exponentially too. So minimizing your investment cost.
Knowledge Compounds Too
Besides money earned and money spent, what else is compounding? Knowledge! If you learn something new today, your existing knowledge + your new knowledge will help you make better decisions for your investment and your life. And that will have an unimaginable compounding impact on your future life. Don’t stop acquiring knowledge, some small tips you learn today (e.g. from my blog) will help you in a big way!
阿尔伯特-爱因斯坦曾经说过复利是世界第八奇迹。你可能已经知道复利是指你的利息本身也在挣利息,比如你有100块,每年10%的利息,一年后你有100 x 110% = 110块,两年后你有110 x 110% = 121块。可是你也知道下面的几个事实吗?
七二法则
七二法则是一个很简易的估算你的投资多久会翻倍的方法。你可以用72除以预估的年收益率。如果你每年可以收益4%,你的投资需要72/4 = 18年会翻倍。如果可以收益8%,就只需要72/8 = 9年!
费用也会产生复利
大多的时候复利都是在指投资,钱怎么生钱。可是,你也应该知道费用本身也是有复利的。如果你每年多花1%在交易费用或是管理费用上,就少投资了1%,它也会随时间慢慢复利翻倍。所以要尽量减少投资费用哦。
还有什么有复利?”知识“也会有复利
除了挣的钱和花的钱,还有什么会生成复利?知识!如果你今天学了些新的知识,你的已有的知识 + 你新的知识会一起帮助你为你的投资和你的生活做出更好的决定。然后它会对你的未来有难以想象的复利影响。永远不要停止获取知识,今天学到的一点小小的知识(比如从我的博客这里)未来可能对你有莫大的帮助噢!
#financialfreedom #compoundinterest
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