“Compound interest is the eighth wonder of the world. He who understands it, earns it; he who doesn’t, pays it.”
Albert Einstein
The subject of compounding reminds me of a classic story of The Peasant and the King.
Once upon a time, there was a king who considered himself to be GOAT in Chess. He held a chess tournament and declared that the winner could have whatever they wanted as their prize. Out of utter shock of King, he was defeated by an ordinary old peasant. The peasant, in apparent humility, asked only that a single grain of wheat be placed for him on the first square of his chessboard, two grains on the second, four on the third, and so forth. The king fell for it and granted him his wish without giving it a thought. Later, his kingdom had to import grain from Argentina for the next 700 years. Eighteen and a half million trillion grains [18,500,000,000,000,000,000] or enough, if each grain is a quarter inch long, to stretch to the sun and back 391,320 times That was nothing more than one grain’s compounding at 100 percent per square for just 64 squares.
That’s the power of compounding!