The power of compound interest

"Compound interest is the eighth wonder of the world. He who understands it, earns it; he who doesn't, pays it." Albert Einstein

A few examples of compound interest:

let's say you are earning 10% a year on $1. The first year, you make 10% and end up with $1.10. The next year, you end up with $1.21, and the next year with $1.33. It keeps adding onto itself. If you are compounding at 30% a year for 30 years, you don't just end up with 10 or 20 times your money, you end up with thousands of times your money.

When you look at businesses with 100 users growing at a compound rate of 20% per month, it can very, very quickly stack up to having millions of users. Sometimes, even the founders of theses companies are surprised by how large the business scales.

(excerpt from the book "The Almanack of Naval Ravikant" by Eric Jorgenson)

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