When interest is compounded, rather than paid linearly, the overall size of the investment grows exponentially faster. The effects are harder to see in the early years, but eventually, they become quite pronounced. In this video, I explain how compound interest works. http://bit.ly/2nYGUjc

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32 COMMENTS

  1. Hi Phil. Thank you for your very informative videos.

    Please correct me if my understanding is wrong. From how I understand it, stock market investing can be both simple and compound interest depending on your investment strategy.

    Compound interest.
    This is for traders (short/long term) who invest and reinvest the earning from previous trades.

    Simple interest.
    Buying-Holding-Selling. Usually found in retirement pitch from the financial agents.

    I would appreciate the inputs of everyone.

    Cheers!

  2. Phil does not care about his SUBSCRIBERS, cause I reading all the posts, and he never reply or comment on them. His just compouding on you all…NOT ME, I will not subscribe until I see him replying…..this is a minimum of respect, event if infos is good!

  3. where do we find this magic fund that earns 10% compounded annually that everyone's always talking about, every bank fund I have seen doesn't even keep up with inflation at sub 2% returns?

  4. I got a really important question for you my friend what if you had $100 at 0.1% interest how long does that take to take off into something big say 5 years how much would it be in 5 years and if you can answer me that I'll hit you with the subscription and I'll mark the bell and I'll head up all your videos with the likes and all that it may be another question where the hell can you get 26% interest and have it be for sure deal on how the hell do you get 26% interest like how do you do that without getting ripped off as a Ponzi or something

  5. I’m 20, and I’m a finance major at OSU. Anytime I can save money, i always try to invest it. Because i know investing now, i might not have to work when I’m 40 if i get lucky. Just gotta invest consistently as much as i can and make sure I stay out of debt.

  6. I think it's very much an omission to not explain the effect of negative compounding interest. Stocks go down, and sometimes massively. Now I know, with value investment you're trying to avoid that, but you can't avoid it entirely, or otherwise you'd be magical, or Warren Buffet (and none of us are either of those). So honestly, I disapprove of this video, it's not complete, and doesn't show the risk to newcomers to investing.

  7. Thing is where do you find a dividend that pays that much? I know if you move your investment around in growth stocks you can make hundreds of percents a year, but I have yet to find one investment I can buy and throw money at year after year and get that kind of return. If any one knows please share.
    Thank you.

  8. Okay, so let me get this straight. I’m 21, I have $15,000 saved up. You’re trying to tell me that if I doubled that every 3 years, I’d be a billionaire by the time I was 70? That seems like an unlikely scenario in the real world. How often can someone pull 20-26% per year?

  9. Phil, I’m confused. So when you say compounding do mean consistently making a certain percentage a year on an investment? For example, if I bought stock A and it grows consistently 20% a year and my investment doubles every 4 years would that be the compounding you are taking about? I was taking to someone and the only way they said you can compound with stocks are with dividends.

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