Albert Einstein was right to call compound interest the eighth wonder of the world. Like the atom, it can accomplish powerful things. Two things are true about compound interest: It works best:
Over time, and
If you leave it alone.
The concept of the interest earning interest on interest earning interest is the simple reason why the rich get richer. It’s an immutable law of finance.
If you stop and think about it, whether we know it or not, we finance everything we buy. “But wait a minute,” you say, “I pay cash for everything I own.” Really? The cash you pay could be earning interest if you had kept it, couldn’t it?
So, by forfeiting that potential interest, you essentially financed it, right? If you paid cash, you have to make payments to yourself to get back to where you were before you made the purchase.
Acting as Your own Bank
The Infinite Banking Concept ® is a concept that is rapidly growing in popularity among those whose goal is to create wealth for themselves, rather than create more wealth for the lending institutions. The concept was developed by Nelson Nash, who is also the author of Becoming Your Own Banker.