The power of compound interest, for better or worse

Posted on: August 11th, 2017 by bobmorris

The title of Alice Schroeder’s biography of Warren Buffett is The Snowball. Why?

When he was a child in Omaha, Buffett and other children were sledding down a hill.

At one point, he noticed that a snowman had fallen over and as it began to roll down the hill, it became increasingly larger.

According to Schroeder, that was an epiphany for Buffett: he recognized the power of compound interest.

Obviously, its impact can be either positive (increased balance) or negative (increased debt).

Most people in the U.S. tend to be chargers rather than savers. That is why the total of credit card debt now exceeds the total of funds in savings accounts.

Can this trend be reversed? Yes.

Will it be reversed? Probably not.

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