Matthew Kent
1 min readAug 21, 2020

--

Nope. Think about actual examples of earning compound interest:

Example 1: A high interest savings account at a bank. In this example you are basically renting your money to the bank. Renting is a form of selling where you sell a product or asset as a service (i.e. you don’t transfer ownership, you just loan it out). You loan money to the bank, the bank loans that money at a higher rate to other people (e.g. mortgage holders) and then the bank pays you

Example 2: Investing in the stock market. In this case in order to invest you are literally buying stocks. When you withdraw money, you are literally selling stocks. If you invest $10,000 in the stock market and by the end of the year it grows to $10,800 we might say that you’ve earned 8% in interest, but really you haven’t earned anything. You don’t have $10,800, you have shares of stock that used to be valued at $10,000 and are now valued at $10,800. The only way to “make” that $800 in cash is to sell some assets (shares of stock)

--

--

Matthew Kent
Matthew Kent

Written by Matthew Kent

Done settling for average. Now I have my sights set on awesome 😎 Get “The Ultimate Daily Checklist,” my free ebook on productivity: http://bit.ly/2pTziwr

No responses yet