Einstein’s Philosophy and Investment Objectives

Einstein was asked what he considered to be the most fascinating mathematical concept. Without hesitation, he replied, "compound interest." A man known for his wit, the reporter laughed out but when he looked at Einstein’s serious face, he relented. A few hundred years ago, Mogul king rewarded a peasant "whatever he can ask." The poor peasant asked for some grains of rice; the king laughed at his mundane thinking. However, there was one catch. The peasant wanted one grain of rice in the first box of chess board and the number doubled in the next box; the king laughed again. Then came time to give the peasant what he wanted. There wasn’t enough rice in the kingdom—the peasant was hanged. I am writing this article for my son who just asked me about investments; he is 18 years old and to see him talk of investment, it was heartening. The purpose of investment is only one—to save for the rainy days and for the days when you want no more rain—when you retire. How much money you should have depends on how you want to live when there is no permanent source of income but for an 18 year old living in the US, a savings of $100 per month in a stock fund will be more than sufficient to secure excellent investment; here the advantage is in the time he’s got for compound interest to grow. A hundred dollar invested today will be over $15,000 upon retirement; now tell me who can give you a better advise. Believe in Einstein when he spoke of the awe of compound interest.