Playbook: Compound Interest

Why Compound Interest Is Your Friend

Carl Nassib may have been a little off base when he was explaining how vital compound interest is but lets not let that get in the way of understanding the importance of compound interest. 

According to Investopedia, compound interest is interest calculated on the initial principal and also on the accumulated interest of previous periods of a deposit or loan. 

Basically, compound interest allows you to make money off your own money without putting in extra effort, time, or resources. They say money doesn't grow on trees but compound interest is the closest thing to it. Compound interest is a patient game and if you are in investing for the long game, it is very beneficial for your financial playbook. 

Nassib may have been incorrect with some of the wording in his clarification of compound interest  but what he was stressing is spot on. Specifically with professional athletes who come up with some capital early in their life. The earlier you can start investing the better you are for it. You can turn a million dollar signing bonus to your financial freedom retirement golden ticket if done right. 

“Compound interest is the eighth wonder of the world. He who understands it, earns it … he who doesn’t … pays it.”- Albert Einstein