Power of compounding calculator
here is an old story that in 1626, the island of Manhattan in the US was sold to a group of immigrants for US$ 24 in beads and trinkets by the inhabitant Indians.
“Just US$ 24!” you may wonder. Seems like a great deal, right?
Wait till you read this. As per the tax records, the entire real estate of Manhattan was worth around US$ 30 billion in 1989, when the number was revealed in a book called “One Up on Wall Street” written by Peter Lynch and John Rothschild.
Sounds a lot, right?
Now read this – Assuming that the Indians were able to convert the beads and trinkets into cash, the US$ 24 “compounded” at 8% interest would have amounted to US$ 30 trillion in 1989…or in other words, 1,000 times more than the worth of real estate in Manhattan!
That’s the power of compounding! If you haven’t heard of this, simply know that Einstein called it the eighth wonder of the world. He said, “The most powerful force in the universe is compound interest.”