Albert Einstein’s Philosophies For Growing Wealth
Over the long term, the compounding effect of yield and dividend growth will account for more than 90 per cent of your total investment return, says Stuart Reeve, the head of BlackRock’s global equity income team. “An investor who started with a $100,000 portfolio in 1970, would now be receiving total annual dividend income of $35,000. That’s more than one third of their original investment, every year.” 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?
Einstein and the magic of compounding
There is no question that Einstein enjoyed the personal freedom to succeed in the United States afforded by the country’s capitalist underpinnings. There’s often a trend to follow the herd — to buy stocks when it seems like everyone is buying and to sell stocks when it seems like everyone else is selling. Being a non-conformist, investing against the grain, can help investors buy low and sell high. He didn’t like the militaristic nature of his schools, where pupils were not encouraged to ask questions, and learning was affected through rote memorization.
He tips UK equity income funds such as BlackRock UK Income and Invesco-Perpetual Income and Newton Global Higher Income, an international fund. There is another advantage to investing in companies with a strong dividend policy, Mr Reeve says. In 1916 a character in an advertisement in a California newspaper called “compound interest” the “greatest invention the world has ever produced”. When company profits are growing, they raise their dividends to reward investors. Some companies strive to do this year after year because they see it as a mark of a well-run enterprise.
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Despite his world travels and, especially later in his life, his ability to command top salaries and fees, he maintained modest living environments. Authority figures, like professors who lecture without open discussion and politicians, don’t always deserve to be trusted. And from a consumer perspective, we have to resist the temptation to consider salespeople authority figures or experts.
- If you invest the same $1000 dollars in your superannuation at a 10% return and leave it for 30 years your compounded total is $17,449.
- This agrees with my view on education, with its worth being measured in more than just financial return on investment.
- “For the seriously long-term investor, dividends are where the action is,” he says.
- One question I was asked at practically every stop was, “What’s the greatest invention of all time?
- His breakthrough in the understanding of the physical universe came from his ability to imagine how the world might work, and then ask himself questions and solve problems to determine which theories could be tested.
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Say you invested £100 (Dh590.82) in the UK stock market way back in 1899. If you spent all your dividends, it would be worth £22,239 in today’s money, according to the long-term Barclays Equity Gilt study. But if you had reinvested them, it would be worth a massive £1.63 million. 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.” You can cash in on the compounding effect of dividends by investing in mutual funds in the equity-income sector, Mr Harvey says.
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. One question I was asked at practically every stop was, “What’s the greatest invention of all time? ” I finally worked up accounting explained with brief history and modern job requirements an acceptable answer to this one, one I hoped would preserve my goal of presenting positive, optimistic views of science. But it is not particularly easy for one to climb up out of the working class—especially if he is handicapped by the possession of ideals and illusions. I lived on a ranch in California, and I was hard put to find the ladder whereby to climb.
I early inquired the rate of interest on invested money, and worried my child’s brain into an understanding of the virtues and excellencies of that remarkable invention of man, compound interest. In conclusion, this article presents a snapshot of current research. The label “eight wonder” was applied to compound interest in an advertisement for a bank in 1925. No attribution was provided, and anonymous advertising copy writers have applied the “eight wonder” label to a wide variety of objects and ideas for more than two hundred years. QI has found no substantive evidence that Albert Einstein, Baron Rothschild, or John D. Rockefeller employed the saying.
