Friday, March 25, 2011

The Most Powerful Force

"The most powerful force in the universe is compound interest."

Albert Einstein

Which way would you receive the most money:

a penny doubled everyday for a month or

$1,000 a day for the rest of your life?

At the end of a 31 day month, the penny doubled

would have grown to $21,474,836

while the $1,000 a day would yield you only $10,737,418.

That's one form of compounding.

Another form of compounding happens if interest is added to a debt balance and the loan payments are not sufficient both to reduce the loan balance and pay the interest that is due. The debt balance never shrinks. That's what happens with revolving charge accounts such as our national debt.

That is why the Bible admonishes us against being in debt.

Prov 22:7 "The rich rules over the poor, and the borrower is the slave of the lender."

Romans 13:8 "Owe nothing to anyone except to love one another; for he who loves his neighbor has fulfilled the law."

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