Einstein and Compound Interest | Snopes.com

August 2024 · 4 minute read
Fact Check

Did Albert Einstein declare compound interest to be 'the most powerful force in the universe'?

Published Nov 6, 2006

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Claim:   Albert Einstein once declared compound interest to be "the most powerful force in the universe."

UNDETERMINED

Examples:


[Sangillo, 2006]

There's an urban legend that Albert Einstein once said compounding [interest] is the most powerful force in the universe.

Whether or not he really said it, that line has become my financial motto. I strongly suggest you adopt it.
 

[Hartgill, 1997]

When asked to name the greatest invention in human history, Albert Einstein simply replied "compound interest."

 

Origins:   Many homeowners who have struggled to meet their

mortgages month after month, only to find after years of making payments that most of their money has gone to cover interest charges, have felt like cursing whoever came up with the concept of compound interest. In that vein, around 1980 (when the neutron bomb and soaring interest rates were prominent news topics) Johnny Carson once quipped during a Tonight Show monologue that "Scientists have developed a powerful new weapon that destroys people but leaves buildings standing — it's called the 17% interest rate." Perhaps that explains why many of us seem to recognize a kindred spirit in the declaration by one of the greatest intellects of our time, Albert Einstein, that compound interest is "the most powerful force in the universe" or "the greatest invention in human history." (Since no context is ever offered for this purported quote, readers might also fairly assume that its intent was to praise compound interest as a wonderful device that allows thrifty savers to realize a significant, low-risk return on their money.)

But did the eminent physicist really ever say such a thing? The claim that he did appears dubious for a couple of significant reasons:

We suspect that this perspective on the power of compound interest is a fairly modern invention, one which has been retroactively placed into the mouth of a prominent dead person to give it more punch.

Last updated:   19 April 2011

Sources:




    Blau, Eleanor.   "Einstein Revisited."
    The New York Times.   27 May 1983   (p. C1)     Calaprice, Alice.   The New Quotable Einstein.
    Princeton, NJ: Princeton University Press, 2005.   ISBN 0-691-12074-9   (pp. 294-295).     Dorfman, Dan.   "Fundamental Advice, Phenomenal Success."
    USA Today.   2 August 1991   (p. B4).     Hartgill, David.   "Power of Compounding."
    The Advertiser.   15 September 1997.     Havemann, Judith.   "Uncle Sam's Dual Standards."
    The Washington Post.   23 January 1988   (p. A1).     Langworthy, David.   "Einstein Was Right — So Is 'Wealthy Barber.'"
    The Houston Chronicle.   1 June 1998   (p. A20).     Sangillo, Karen.   "All About 'Free Money' and How to Earn It."
    Bucks County Courier Times.   5 November 2006.     Shapiro, Fred R.   The Yale Book of Quotations.
    New Haven, CT: Yale University Press, 2006.   ISBN 0-300-10798-6   (pp. 230-231).     Topolnicki, Denise M.   "How You Can Beat the Five Threats to Your Retirement."
    The Buffalo News.   8 November 1993   (p. 12).

David Mikkelson founded the site now known as snopes.com back in 1994.

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