The Kuflink Peer to Peer Investor Blog

Publish at: 2019-03-18 12:01:31

What did Einstein call the ‘Eighth Wonder of the World’?

No, it wasn’t his theory of relativity or even his world-famous E=mc², it was compound interest!

It goes without saying that fact this can come in very handy for pub quizzes, but on a more serious note - it might just change the way you manage your finances forever.

Einstein was totally right.

So, you’ve heard the term ‘compound interest’ before, but just to re-cap: it means re-investing any interest you’ve earned alongside the original sum. In other words, you’re earning interest on top of your interest.

The concept may well be nothing new, but did you know that compound interest alone could add thousands to the value of your investment?

For example, if you invested £10,000 at a rate of 7.2% pa for ten years, you’d have £17,200 at the end of the term.

However, if you compounded that interest on an annual basis over the same term, you’d have £20,042.31.

That’s a huge £2,842.31 extra in your pocket just for making one simple adjustment to the way you invest… and it won’t cost you a penny more!

So next time you receive some interest back from your investment, make sure you remember Einstein’s eighth wonder and watch your returns add up faster than ever.

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