Compound Interest

8 min readFeb 10, 2021


~ Recently, I have been thinking a lot about investments. Financial investments, specifically. The long-term ones, the ones you believe in — and the short-term opportunities that may be out there, in the realms of day trading, swing trading, range trading, cryptocurrency trading, etc. Additionally, the recent threat of a short squeeze surrounding the “meme stocks” of GameStop, AMC and others has brought the temporary insanities of the stock market back into the forefront of the American consciousness. This of course includes me, who tried and ultimately failed to profit from this rather unprecedented black swan-style event…

~ r/WallStreetBets

In the realms of investing — of which I have both some knowledge and experience thus far in my life (though am by no means an expert) — I always return to the quote about compound interest being the “8th wonder of the world”:

~ “Compound interest is the eighth wonder of the world. He who understands it, earns it… He who doesn’t, pays it.”
~ Albert Einstein {I didn’t even know that it was Einstein that said this}

Compound interest isn’t magic, but it is a wonder. Primarily because it deals with something, conceptually-speaking, that us human beings cannot really wrap our minds around: The work of long periods of time.


Let’s talk about the TV show Futurama. Protagonist, delivery boy, and iconic beacon of mediocrity Phillip J. Fry once put 93 cents into an account. A thousand years later, even at a small interest rate, he ended up with $4.3 billion.

It’s fair to point out that we are talking about a cartoon here, but Fry isn’t the only case when early investment and years of patience yielded exponential payoffs. (Besides, he was accidentally cryogenically frozen, so he’s basically just a lucrative example of failing up.)

Let’s give props to a real person with the kind of legit financial foresight we should all aspire to: Anna C. Mott was the richest woman in Toledo, Ohio at the turn of the 20th century (get it, girl). When she died in 1902, she left behind a $1,000 fund to improve her city’s parks. But the gift came with a condition: No one was allowed to touch the money for 100 years.

Anna Mott wasn’t just trying to teach the impulsive youths of Toledo a lesson about carefully considering their choice in playground equipment. Her 100-year requirement was a calculated strategy to optimize her gift for the city’s benefit — and it worked beautifully. When the fund paid out in 2002, it had grown to a hefty $213,000 (or about 10 times the purchasing power as it had started with).

So how did this happen?

Compound Interest Calculator — NerdWallet:


The time value of money is one of the core concepts of modern finance, and was something beaten into us at business school. Everyone knows that money invested into assets (such as stocks and bonds) that have an *internal rate of return* (that is, they represent the productions of enterprises that generate revenues, profits, dividends, long-game speculative expansion based on current expectations of their future actions, etc.) have the potential to grow. And that growth compounds, in that its increasing accumulation of principal also contributes to its own % rate and $ amount of growth from there; in investment accounts, interest and dividends generated from such assets are capable of being automatically reinvested into the lump of principal or into other assets, furthering this cycle into an exponential relation. As you can see above, this culminating relation is of the kind that benefits greatly from increased 1) time, 2) rate of return, and 3) continuous, periodic investment.

I’m no investment advisor, and everyone should do their own due diligence, assess their risk tolerances, understand utterly every investment they make in the stock market or crypto market or any transaction that involves making a bet on this future material reality of ours… but history shows time and time again that the best performing investors are the ones that forget about their investments altogether. As someone who spent a lot of time in college not only learning about finance and the nearly undefeated efficacy of the “efficient market hypothesis”, but also invested time to test out different high-level equity investment strategies via real-time simulation, I can say with easy confidence that both the easiest and best long-term investment strategy seems to be ‘buy the market’ and walk away. Fire-and-forget. The historical numbers show this concise strategy to be a winner: Dollar-cost average the amount of savings you wish to invest in the highest risk/reward financial asset out there — equities — and periodically throw whatever that amount is for you into SPY or a similar index fund, and then just forget about it as you go about your daily life.

Invested in the overall market, let it grow @ a clip of 10% annually, waiting for retirement {ha!}, or just whenever you feel you may need some of that compounding balance again in your life’s course. It is boring yet effective. In the long-run (10+ years), even the best, most knowledgeable and experienced traders and fund managers are not able to beat the market (“the market” in this case = the S&P 500, which makes up about 80% of all major global equity activity). So why should *anyone* think they could? By picking individual stocks, or day trading, or using some reasoned combination of fundamental and technical analysis, or trying some highfalutin alternative-style investment strategy, one should first understand that they will ultimately be doing that because they enjoy the process — and the potential thrills — of daily or highly conscious upkeep in their investment choices, and not because it is likely to outperform a long-term index fund strat.

Now, much of that goes by the wayside when it comes to cryptocurrencies, which can outperform stocks, form their own lightspeed bubbles of millionaire-making capacity, and surge based on memes and tweets all rather capriciously, without any fundamental reasoning behind such extraordinary performance. My recommendation would be much the same on crypto — do your own research! Except understand that you are both 1) investing in something fundamentally different from an equity, as there is no underlying company or internal rate of return to a currency’s valuation — it is just a mode of exchange, a store of value — and 2) likely to miss out on some extraordinary investment value if you forgo it as an asset worthy of your portfolio’s attention! One need only look at their price movements over the last 5 years to understand the home run potential of some of these digital coins.

~ Extremely low, initial fractional cent price points, combined with high {somewhat arbitrary and capricious} demand + limited, sometimes suddenly very illiquid supply = potential 1,000+% compounding increases in very short periods of time.


In the same way that our brains struggle to understand or ever take full advantage of the power of compounding, might our minds discount its value unto itself? That is, what might our brains be continuously compounding without our conscious knowledge? My continuous fascination with the unconscious mind pairs nicely with this riff upon the 8th wonder that is compound interest. Our unconscious is both wide (broadly populous, full of experiences remembered, repressed, never consciously acknowledged) and deep (hyper-specific, minutely discerning, full of existential fears and desires).

Throughout life, the more you learn and experience and discover — all of which your mind takes into its conscious and unconscious holds — the more one grows their mind’s capacity. Whereas a stock market or cryptocurrency asset theoretically has an unlimited capacity to grow and raise its price, its market capitalization, its value — it is true there are limitations within the composition of the cells and neurons making up the meat of our brains. Entropy ravages Man, while it leaves the corporation relatively unmarred. Mentally, individually, we can only hold so much, we can only grow so much, forever bounded in the end by our mortality. But for every bit about the strict limitations of memory, you also find out about phenomena that break such barriers.

In my own experience, I find my ability to converse with others, to think through problems, to try to perceive or predict every possible kind of potentiality in the world around me — are all amplified by the freely associative, interdependent and mostly unconscious references, relations and reactions that come from within my mind’s spaces. They are borne out of my mental travels. The more I know, the better prepared I am. To succeed, to win, or just to make someone laugh. Perhaps this is a reductive way of describing … life. But consider it from the standpoint of all the investment discourse above, from the foundation of initial investments and their grand importance to the desired end state {a fat pile of loot}.

Reading, watching, conversing, learning, gaining new information and knowledge operates much in the same way as an investment. Our inputs compound over time, inevitably outputting ideas and benefits which you may not yet comprehend in the present, but which payoff over the long-term. These rewards may come only subconsciously, honing instincts you couldn’t realize before, for interactions and creations you have yet to engage with. But, all importantly, there is a progression. Whether it be simply linear, or exponential, there is a net increase. Not in your value as a person, as that is not how I would judge — but in your range of experientia to draw upon in any given situation.

~ drew this while in an altered state to express how ~ after certain experiences ~ there is an expansion upon one’s ability to effectively or creatively respond to any given stimuli before them

The more things you have bouncing around in your noggin — the more principal backgrounding you from prior life experiences — the more creative and efficacious you can become. The more powerful and wealthy you become? Certainly, in your heart and mind {the only place where such things really matter in the end 😊}.

It is important to make sure that those initial inputs, as well as the recurring investments along the way, are at least somewhat useful, beneficent to you and the world around you.. and not just online shitpost memes.

To extend the ongoing metaphor to its utmost — “buying the market” in this sense means to learn forever, to live like a sponge among the wilds of the world, taking in as much as you can to continuously augment your mind’s spaces unto a gleaming hoard. ~