The Most Powerful Force In The Universe

Posted by Fitz Villafuerte under Mindsetting on May 9, 2008

According to Albert Einstein, the most powerful force in the universe is compound interest. How can a great man of science speak so highly of a mathematical and economic concept? Surely, there must be a reason behind this claim and I’ll try my best to explain it here.

Right from the very beginning of our lives, exponential growth (my personal term for the concept of compound interest) is already working for us. Inside the womb of our mothers, we all started as a single fertilized cell. That cell splits into two within 24 hours and those two cells would again divide to become four. Through this continuous process, that single cell eventually grows into a human baby composed of billions of cells in just a span of 9 months.

That is just one example of how exponential growth affects our world. Of course there are many other theories whose foundation was built through the concept of geometric progression. This includes the creation of the atomic bomb which Albert Einstein once theorized to be possible through a massive nuclear chain reaction. Perhaps this was the reason why he claimed that compound interest is the most powerful force in the universe.

But now, we should concern ourselves on how we can apply this tool into our financial life. How can we accumulate wealth exponentially and become rich?

exponential-growth

The first step to harnessing the power of exponential growth is to understand the three factors that affect it. These are the amount of input, the rate of growth and the number of cycles.

Input
This is your starting investment. The higher your initial amount, the faster it will grow.

Rate
This is the rate at which your input grows. Likewise, the higher the rate, the better.

Cycle
This is the number of times that the process of growth is applied. The more cycles you allow, the higher your earnings.

Once we understand how these three work together, then we can furthermore study how we can control them. And once we have learned this, then our paths will be set towards financial freedom. So the question now is, what can we do to harness the power of exponential growth?

To receive more articles about wealth and personal finance, subscribe to Ready To Be Rich.

———
Photo courtesy of Giuseppe D.

Advertisement



SELECT AN ARTICLE TO READ NEXT BELOW:


Tags: , ,

13 Responses to “The Most Powerful Force In The Universe”


  1. Dexter says:

    It is only now that i noticed that I have not yet subscribed to your blog.. Now I am .. Happy Blogging.. How is Finance Blog Doing ?

  2. Fitz says:

    Hi Dexter, thanks for subscribing.

    In general, I think finance blogs are doing well, there’s not so many Pinoy blogs out there but there’s a lot of personal finance websites written from other countries. 🙂

  3. […] and assets to acquire good debt (an investment debt that creates value), then we can expect exponential growth on our […]

  4. Hanks Weekly Hangouts #30 (May 18, 2008) | My Investing Blog says:

    […] The most powerful force in the universe? No, it’s not about Star Wars. ReadyToBeRich tells us what it […]

  5. Hi Fitz, I see you’ve read my eBook. 🙂

    BTW, I really like your life story article…the little pictures are an awesome explanation of the transition process of moving from point A to point B.

    Excellent stuff.

    Paul

  6. Fitz says:

    Hi Paul. Yes, I’ve read your eBook and thoroughly enjoyed it. 🙂

    Thanks for visiting and taking time to leave a comment. It’s sincerely an honor for me. 🙂

  7. […] financial calculator uses the principle of compound interest to calculate how your money will grow. Although the presented results are not realistic because it […]

  8. […] Much is similar in our lives. If we want to become wealthy, we first need to focus on earning and saving money. We need to be frugal and carefully plan our purchases. And as we acquire more assets and our investing skills become better, accumulating wealth becomes easier and faster. Simply, we should understand and believe in the most powerful force in the universe. […]

  9. […] you’re a regular reader here, you may already be familiar with the power of compound interest. Nevertheless, I suggest you still watch this presentation because it is likewise creative and […]

  10. PL Samson says:

    compound interest = wealth
    wealth = power

    That’s it.

  11. […] By initial impression, it looks like the time deposit performed better than the three after four years. Thanks to the power of compound interest. […]

  12. […] This means if Eric wants to get to his first Cross Over Point, then he needs to save PHP 41,667 per month for 15 years. Too high or difficult? Not really because this equation does not yet include the power of compounding interest. […]

  13. […] He believed in the power of compound interest and buying stocks for the long […]

Leave a Comment and Join the Discussion