Compound Interest: The 8th Wonder of the World Explained

17 Jul 2026 · 1 min

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In this short presentation, the speaker references an interview with Charles Schwab, highlighting Schwab's two core investing principles: long‑term focus and the power of compounding. He illustrates the concept with a concrete example—investing $100 each month from birth until age 65 at an average 8% annual return would accumulate over $600,000, even though total contributions total only about $78,000. The speaker emphasizes that the bulk of the wealth comes from time and compounding, not the amount contributed, and urges listeners to start investing early with whatever they have, warning that delaying costs years of growth rather than dollars.

Chapters

Now yesterday I talked about an interview that the CEO Charles Schwab did, and he talked about the two most important things about investing. And today we're going to talk about what he said, investing for the long term or compounding. Now people often call compounding the 8th wonder of the world, and once you see this example, you'll understand why. Now imagine a baby's born today, and if you invested just $100 a month from birth until age 65, and you earned an average of, let's say, 8% return, that child could end up with more than $600,000. Now here's the crazy part. You only contributed about $78,000. The rest, over half a million dollars, came from time and compounding. That's why waiting is so expensive. It's not the dollars that you lose, it's the years. The earlier you start, the harder your money begins to work for you. So don't wait until you think you have enough. Start with what you have. Your future self is going to thank you.