Story of Red Indians - the Power of the Compound interest.

DO YOU KNOW  that in 1626, the Red Indians in the east coast of U.S.A, sold Manhattan, to a group of immigrants for $24 in beads and trinkets.

Well, yes. The entire Manhattan (Where World Trade Centre was located), world's one of the costliest city was sold to USA by Red Indians for just $24. What do you think that, suppose if the Red Indians put that $24 in the Bank FD at the rate of 8% compounded annual return than today after 385 years can they buy Manhattan back from USA? Let me tell you that the approx valuation of Manhattan is $2 Trillion today. 

For Centuries they were subject to a lot of criticism and comment because of the apparently low value of sale. But it appears that the Red Indians seem to have got a better deal than the people who bought the island.

What do you think that, how much it will become after 385 years if you invest $24 at the rate of 8% annual return? Well, it becomes $8 Trillion and more….!!! This is the power of compound interest. Red Indians can not only buy back the entire Manhattan but they can also buy the entire London, Shanghai & Mumbai today. 

This example clearly brings out the power of compounding. Compounding is essentially reinvesting the earnings from a particular asset rather than spending it.  What this example tells us is that it's important for an individual to start investing early, so as to give enough time to the money to compound.

Moral: Start Investing as early as possible & stay invested for the long time horizon to build Wealth. The compound interest is very powerful and make you very rich over a time.