Compound Interest

Do you know about this thing called compound interest??

If 233 years ago, George Washington had taken the silver dollar he erroneously threw into the Delaware River at Washington's Crossing and invested it in the stock market at the average return rate of 9.4%, he would've made...

Wait for it.  

In fact, just guess.

How much you say?

You didn't use a calculator, right?

If you did, you cheated.

He would've made...

$2 billion.

If 233 years ago, George Washington had put that silver dollar into a U.S. government bond, with an annual average return of 3.9%, how much would he have today?

I know, you are going to guess more closely this time.

Because $2 billion felt like out of the realm of possibility.

I mean, that's A LOT of money.

Not that he could've spent it 233 years later.

His great, great, great, great, great, great grandchildren could've though. 

Just think, instead of the Vietnam Memorial or the really tall one that looks kind of phallic, we could've had a giant set of wooden teeth statue.

Or good old George could've come back from the dead to spend that money on an iPad.  Oh, Apple would kill for that kind of marketing.

So how much do you think he made?

It's a simple formula really.  FV=PV*(1+r)^n.

I think.

Anyway, he only would've made $4,747.

Or thereabouts.


Womp Womp.

So, what I think is that maybe the higher return is worth the higher risk.  In finance and in life?

And who said grad school was a waste of time?