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Power of Compounding

The Power of Compounding is one of the most important investing lessons

People

Richard Russell

Mentioned by the Following

Publications

Rich Man, Poor Man

Compounding is a wonderful road to riches
  • It is safe
  • It is secure
  • It is easy

However, compounding requires patience and time
  • It is boring
  • It requires patience (it only works through time)
  • It requires sacrifice (you can't spend what you've saved)
  • Time is one of an investors best allies

Real World Example Of The Power of Compounding
A person who invests less money but earlier can end up with much more money than a person who invests more money but later in life.
  • Person A
    • Invests 1,000 per year from age 19 to 25
    • Earns 10% per year
  • Person B
  • At age 65, person A ends up many times more money than does person B

Warnings and Disclaimers

The information contained herein is obtained from sources believed to be reliable, but its accuracy cannot be guaranteed. It is not designed to meet your personal financial situation - we are not investment advisors nor do we give personalized investment advice. The opinions expressed herein are those of the publisher and are subject to change without notice. It may become outdated an there is no obligation to update any such information.

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