Why Compound Interest Is called the 8th Wonder of the World ?

“Compound interest is the eighth wonder of the world. He who understands it, earns it … he who doesn’t … pays it.” Those words were uttered by the great mathematician, Albert Einstein.

What is Compound Interest ?

Simple interest is only based on the principal amount of a loan, while compound interest is based on the principal amount and the accumulated interest.

Here is an example to shows power of Compound Interest –Simple-growth-and-compound-growth1

Compound interest – The 8th wonder of the world

  1. Compound interest can be your best friend when you use it for Investing and Early Debt Reduction  purpose.
  2. Compound Interest as an Enemy – Just like compound interest works for you, it can work against you when you it is used for taking Mortgage and Consumer Debt.
  3. Compounding interest teaches and rewards discipline.
  4. Compounding interest lets you sleep good at night – What do the wealthiest and wisest investors have in common? They are always smiling, because they are making money every second of the day. That’s the power of compounding interest. Nothing can stop it from growing.
  5. Albert Einstein once joked that the most powerful force in the universe is neither mass nor energy. It’s compound interest, which is what happens when you earn interest on your money and on the interest that it’s already earned. While some investments have compounding built in, others don’t automatically do it.


Compounding the 8th Wonder –  Power of Equity

*10000 invested in EICHER MOTORS* in
1992 – today 80 lacs
*10000 invested in ASIAN PAINTS* in
1986- today 90 lacs
*10000 invested in HDFC in*
1990 – today 1 cr
*10000 invested in BRITANNIA* in
1985 – today 1.06 cr
*10000 invested in MRF in*
1985 – today 1.10cr
*10000 invested in BOSCH* in
1985 – today 1.20 cr
*10000 invested in AMARA RAJA* in
1991 – today 1.25 cr
*10000 invested in SHREE CEMENT* in
1990 – today 2.90 cr
*10000 invested in INFY in*
1993 – today 3 cr
*10000 invested in DR. REDDY in*
1986 – today 10 cr
*10000 invested in WIPRO in*
1981 – today 400+ cr
*Dividend Income Extra*

The Joys of Compounding

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