Investments - Power of Compounding

• We all know that Manhattan is the costliest place in America for real estate prices. But once upon a time it was a remote place in America occupied by Red Indians.
  
• When a group of Europeans reached Manhattan, they purchased it from the Red Indians. It happened in the year 1626.
  
• Manhattan was sold for 24 Dollars (960 Rupees at today’s rate) in trinkets and beads. Present Value of City – 100 Billion Dollar
  
• For many years the Red Indians have been the subjects of cruel jokes because of this.
  
• Had Red Indians saved this money in say a fixed deposit and earned 8% average Interest per Year compounding. In that case their present bank balance would have been 120,000 Billion US Dollars.
  
• This incident was first narrated in the book “One up on Wall Street”, written by Peter Lynch, one of the most successful mutual fund managers the Wall Street has ever seen
  
• This little story shows the power of compounding.