Peter Minuit worked for Dutch North American Colony in the early part of 1600s. Why are we talking about him? You say. He made the greatest trade ever! If it is to be believed he purchased Manhattan island for the Dutch from Lenape Native Americans for $24 in trinkets. What is Manhattan worth today? It is probably around $1.74 trillion or even more.
Benjamin Franklin gifted $5000 to two of his favorite cities Boston and Philadelphia in 1790.
He had 2 conditions – this money needed to be invested and could be paid out at two dates. After 100 years, each city could withdraw $500,000 for public works projects. After 200 years which happened to be in 1991 the money grew to $20 Million.
In 1906, Dow closed at 100.25 points. In 2019, Dow is above 28000 points.
Walmart stock grew from 10 cents to $120 (adjusted for splits) not including dividends over 50 years.
1000 USD invested in Microsoft stock in 1986 would be roughly greater than $2 Million today (2019).
Now you might have figured out what I am alluding to. You are right! I am talking about power of compounding. “Compound interest is the eighth wonder of the world. He who understands it, earns it, he who doesn’t pays it.” – Albert Einstein.
Everybody respects Warren Buffett who is a strong believer in compound interest. Per Forbes, he is the third richest man in 2019. Here is his net worth at different ages. Warren earned more than 99% of his wealth after his 50th birthday.
| Year | Warren’s Age | Net Worth in USD |
| 2019 | 89 | 88.8 Billion |
| 2002 | 72 | 36 Billion |
| 1996 | 66 | 17 Billion |
| 1982 | 52 | 376 Million |
| 1966 | 36 | 8 Million |
| 1960 | 30 | 1 Million |
| 1951 | 21 | 20K |
“Context please!” you say? When you invest in your 401K from the age of 21 to 67 you will notice that your nest egg keeps growing exponentially. Especially from the age of 60 to 67.
Stay invested and retire rich!
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