What Albert Einstein knew about investing

If you are patient, and stick with your investments over time, you will almost always come out ahead. Being thankful for these opportunities is certainly one reason not to throw it away by making bad decisions with money. It may be difficult, but financial independence is within reach for anyone who wants it although there can be unavoidable external situations making it more difficult or impossible for some. But for at least those reading Consumerism Commentary, there should be enough opportunity to move towards financial independence. Albert Einstein definitely leaned towards the socialist end of the economic spectrum, but he always emphasized the important of individual freedom, democracy, and personal liberty.

In 1916 a character in an advertisement in a California newspaper called “compound interest” the “greatest invention the world has ever produced”. He might have; the sentiment matches what seems to be this particular genius’s sense of humor. His breakthrough in the understanding of the physical universe came from his ability to imagine how the world might work, and then ask himself questions and solve problems to determine which theories could be tested. For the most part, he let other scientists worry about the testing part, giving himself room for his thoughts to consider the world in ways no one had considered it previously. It seems Einstein would not be too happy with the way people revere the most popular financial gurus. Fans of gurus will continue to stand up for their heroes despite displays of lack of character and lack of sense.

What Albert Einstein knew about investing

It doesn’t change the fact that compound interest should be on the mind of anyone looking to build wealth over time. Western companies, particularly in Britain and the US, have traditionally paid the most generous dividends, says Tim Harvey, the director of Offshore Online, an international broker. “That is slowly changing. Japanese companies are starting to pay income. So are many in China and the Far East.”

Sometimes a comment is attributed to a famous individual to increase the prestige and believability of the comment. Also, a quotation from a famous person is often considered more interesting and entertaining. QI hypothesizes that the statement was crafted by an unknown advertising copy writer. Over the years it has been reassigned to famous people to make the comment sound more impressive and to encourage individuals to open bank accounts or purchase interest-bearing securities. Authority figures, like professors who lecture without open discussion and politicians, don’t always deserve to be trusted. And from a consumer perspective, we have to resist the temptation record of payment definition to consider salespeople authority figures or experts.

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1. There is one force in the universe more powerful than compound interest.
2. One question I was asked at practically every stop was, “What’s the greatest invention of all time?
3. There is another advantage to investing in companies with a strong dividend policy, Mr Reeve says.

But if you allowed the interest to compound, your savings would grow to more than $18,000. And when savings rates finally revive from today’s miserable lows, the effect will be even more powerful. He famously called compound interest “the most powerful force in the universe” and he certainly had a point.

Compound Interest Is Man’s Greatest Invention

FYI – Robbins’ exact line was “Compound interest is such a powerful tool that Albert Einstein once called it the most important invention in all of human history.” In personal finance articles I frequently find quotes injected to attribute some further relevance to one’s position. There is one force in the universe more powerful than compound interest. In the US, Procter & Gamble has increased its dividend every year for the past 56 years. Other familiar US names with a consistent track record of annual dividend rises include Coca-Cola and Johnson & Johnson (both 49 years), Colgate-Palmolive (48 years), Chubb Corp (46 years) and PepsiCo (39 years). This compounding process repeats itself year after year, which means you earn interest upon interest upon interest.

QI hypothesizes that an anonymous advertising copywriter initiated the idea that compound interest was the world’s greatest invention or man’s greatest invention. However, 1916 is not necessarily the origin of this hyperbolic statement, and future researchers may locate earlier citations. QI was unable to find any support for the attachment to Einstein, and QI believes that it is very unlikely that Einstein made this remark.