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?
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- When company profits are growing, they raise their dividends to reward investors.
- And from a consumer perspective, we have to resist the temptation to consider salespeople authority figures or experts.
- This is less of a problem if you hold your money offshore, but you may need to seek tax advice.
- Compound interest is 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.
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.”
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 what do cash flow statements have to do with liquidity chron com 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.
What Albert Einstein knew about investing
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.
Did Albert Einstein declare compound interest to be ‘the most powerful force in the universe’?
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.
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.”