Einstein supposedly said compound interest is the eighth wonder of the world. Whether he actually said it or not doesn't matter — the point stands.
If you understand it, you earn it. If you don't, you pay it.
Most people get this backwards. They compound their debts and interrupt their investments. They panic sell after a 10% drop, then pay 22% APR on a credit card balance.
The math is simple but the behavior is hard. Compounding requires time and patience. It rewards people who do nothing when everyone else is doing something.
The difference between earning compound interest and paying it is often just whether you can sit still for a decade.
If you understand it, you earn it. If you don't, you pay it.
Most people get this backwards. They compound their debts and interrupt their investments. They panic sell after a 10% drop, then pay 22% APR on a credit card balance.
The math is simple but the behavior is hard. Compounding requires time and patience. It rewards people who do nothing when everyone else is doing something.
The difference between earning compound interest and paying it is often just whether you can sit still for a decade.