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Financial Foundation · Module 2 of 9
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Alex Academy
L0 · M2 · Compound Interest
📺 Video Lesson · Module 0.2
Compound Interest — The Engine of Wealth
⏱ 3:50 min · 24 scenes · click to start
⚡
Compound
Interest
Alex Academy · Module 0.2
💰
You have
€100
Not a lot.
But what about
20 years
?
?
The number might
surprise
you.
At 10% annual return
Year
1
€100
→
€110
That's easy.
Easy
After
2 years
though
.
.
.
Expected
120
≠
You get
121
One euro more
just
+€1
Why?
This is the key
Interest
on
interest
From
year one
.
Compound Interest
The Engine
of wealth.
Year by year
Yr. 0
€100
Yr. 1
€110
Yr. 2
€121
Yr. 3
€133
Yr. 4
€146
After 10 years
€259
Your money
doubled
. Without doing anything.
And after
30 years
?
?
After 30 years
1,745
€ · from
€100
0yr
10yr
20yr
30yr
Exponential growth
17×
more.
In action.
The Rule of 72
In how many years do you
double
?
72
÷
7%
=
10yr
Every
10 years
— doubling.
And if every month
€100/month
into an
index fund
?
30 years · 7% annually
0 EUR
from €36,000 invested · over €86,000 pure interest
Albert Einstein · 1955
"
Compound interest is the
eighth wonder
of the world
Earns.
He who doesn't —
Pays.
The power of starting early
Start at 35
€500k
at retirement
Start at 25
€1M
at retirement
The cost of delay
−€500k
· 10 years of delay
Remember 3 numbers
10yr
Horizon
7%
Return
€100
Per month
Is it working for you?
Next: Emergency Fund.
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Alex Academy
Personal Finance · L0 · Module 2
This is
the engine
.
Now you understand it.
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