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欢迎您收听由喜马拉雅出品的英语听书解读穷查理宝典
作者 孙露露
演播 艾比
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The eighth wonder of the world
Einstein once said
That there is something
That is the eighth wonder of the world more powerful than even the atomic bomb
It is the compound interest of the interest rate family
Which has a brother name of a very different character called simple interest
Both simple interest and compound interest are methods of calculating interest
But simple interest is only calculated on the principle
While compound interest is calculated on the principle and the interest generated by the principal together
Which is often referred by the interest rolling
Most of them are calculated using compound interest for example supposing in investor a principle ple of zero zero zero zero u on a financial product with an annual interest rate of ten percent on a term of two years
If calculated a simple per rest
The investor can get one hundred urn of interest per year and two hundred uran of interest after two years
But if you can't compound interest in addition to the two hundred dollar interest generated by the principal in two years
The one hundred dollar interest in the first year will also generate ten dollar interest in the second year
So the investor should end up with a return of two hundred and ten dollars
The some of the two and the more principlal in investor has the higher the interest rate on the and the longer the financial cycle
The more interest will be generated by compound interest
Warren bubutt once made the classic analogy
That if the queen of spain had not supported columbus in his voyage and had invested thirty dollars zero zero zero at an annual interest rate of four per cent with compound interest
Then by one thousand and ninety nine the spanish royal family would be sitting on eight trillion dollars in assets equivalent to the annual gdp of the us
The poor of compound interest in accumulating capital is thus evident simply put if an investor plants a seed of capital in the spring
Then over the course of time
Simple interest will return a large tree to you
While compound interest will give you a forest
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