Albert Einstein’s 8th Wonder of the World


Michael Hunter

To recap last week’s topic, saving is putting money in a place where there is no risk of loss, investing is putting money in a place where you have a risk of loss, but a calculated risk, and gambling is putting money where you will either lose big or win big.

Some people who invest have their money in the stock market and they ride the risk wave every day. Others save their money in income producing vehicles that provide consistency. If we compare these two possibilities, at the end of a 5-year period, the outcome may surprise you.

What if your investment account went up by 50% in year 1, then down by 50%, then up 50%, then down 50%, and up again 50% in year 5. Would your investment be up, down or break even?

Would it surprise you to know that you would be down over 16% in this situation? Let’s say you started with $100 000, and after the above-mentioned scenario, you would now only have $83 375!

This is probably not what you would expect!

Let’s compare that to saving your money in a vehicle that produces a consistent return of 5%. At the end of 5 years, you would have $127 628.

Surprising? You might also notice that the actual amount of growth is getting bigger because the previous year’s growth is growing too. This is called compounding interest, and Albert Einstein is credited with calling it the 8th wonder of the world.

For more information about how much of your money should be saved versus invested, book a complementary 10-minute consultation at