Fans are invested in their heroes; to admit their guru isn’t perfect is to admit they wasted time, money, and energy. A superfan perceives an attack on Robert Kioysaki’s business practices or a criticism of his sales techniques as an attack on the man and his following. A criticism of Dave Ramsey’s approach to financial advice is dismissed without consideration; after all, he’s the successful author. You can cash in on the compounding effect of dividends by investing in mutual funds in the equity-income sector, Mr Harvey says. He tips UK equity income funds such as BlackRock UK Income and Invesco-Perpetual Income and Newton Global Higher Income, an international fund.
Although being a genius in one genre doesn’t guarantee illumination is all other areas of thought, observers can adapt Einstein’s philosophies of life and his personality traits into better approaches to money management and life in general. Einstein might have more to offer today’s thinking saver than just compound interest. Whether he said these words or something similar is relevant only to purists who say serious journalists shouldn’t attribute quotes willy-nilly to emphasize their importance.
He clearly sees the importance of cognitive ability and education for growing human capital, which has a positive effect on options for long-term wealth. Over the long term, the compounding effect of yield and dividend growth will account the purpose of depreciation for more than 90 per cent of your total investment return, says Stuart Reeve, the head of BlackRock’s global equity income team. “An investor who started with a $100,000 portfolio in 1970, would now be receiving total annual dividend income of $35,000. That’s more than one third of their original investment, every year.” In the long run, it is the compounding effect of reinvesting dividends that really makes you rich. Say you invested £100 (Dh590.82) in the UK stock market way back in 1899. If you spent all your dividends, it would be worth £22,239 in today’s money, according to the long-term Barclays Equity Gilt study.
Disdain for cult of personality
Albert Einstein isn’t the only famous person to appreciate the power of compounding. For John D Rockefeller, the late American industrialist, it made life worth living. “Do you know the only thing that gives me pleasure? It’s to see my dividends coming in,” he once said. A stock that yields 6 per cent and raises its dividend by 5 per cent a year will double your money in just 12 years from income alone, according to the investment website, Motley Fool. A. Michael Lipper, president of Lipper Analytical Securities Corp., quotes Albert Einstein’s remark that “The eighth wonder of the world is compound interest.” If you can invest at a sure 7 percent return, your money will double in 10 years.
Capitalism can be destructive to society
For Einstein, advanced education is not job training, but training to perform at high levels in any situation, job or otherwise. This agrees with my view on education, with its worth being measured in more than just financial return on investment. Would Einstein feel the same way now, with a college education costing several multiples more than it did in his time, even after taking inflation into account?
Did Albert Einstein declare compound interest to be ‘the most powerful force in the universe’?
First, the yield, which is calculated as the dividend payout divided by the market valuation of the company. If the dividend is $5 and the company is valued at $100, the yield is 5 per cent. “One-hundred dollars invested at the end of 1925 would be worth $9,229 today if you had spent the dividends, but $299,395 if you had ploughed them back into your portfolio.” The good news is that you can feel the power of compound interest simply by paying money into a savings account and patiently letting it grow in value, year after year.
- But for at least those reading Consumerism Commentary, there should be enough opportunity to move towards financial independence.
- If the dividend is $5 and the company is valued at $100, the yield is 5 per cent.
- Fans of gurus will continue to stand up for their heroes despite displays of lack of character and lack of sense.
- Also, a quotation from a famous person is often considered more interesting and entertaining.
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.
Compound Interest Is Man’s Greatest Invention
There’s often a trend to follow the herd — to buy stocks when it seems like everyone is buying and to sell stocks when it seems like everyone else is selling. Being a non-conformist, investing against the grain, can help investors buy low and sell high. Albert Einstein was arguably one of the most brilliant thinkers in the twentieth century.
There is another advantage to investing in companies with a strong dividend policy, Mr Reeve says. Dividends are particularly important in today’s turbulent economy when growth is much harder to come by, says Dan Dowding, the chief executive of IFAs Killik & Co in Dubai. “From day to day, investors focus mostly on share price movements. But dividends and, more importantly, dividend reinvestment, can have a much greater impact on your long-term returns.”