The Magic Power of Compounding Interest Growth, the 8th Wonder of the World
Updated: Mar 10, 2021
Following from my latest article where I mentioned about the average annual total return of the S&P 500 Index since 1926 being 10% per annum. Assuming a 10% average annual growth over the next 20 years, by investing only $1500 per month, you would be reaching the so much aimed $1,000,000$ mark, starting from 0. It is seems unreal but this is the power of the compounding interest growth over the long term, and it is just simple math. Incrementally, with $3000 per month, you would reach over $2,000,000.
However, personal investment in real life is often guided by emotions and not only by math. Therefore, this goal can only be achieved with discipline and a plan to force you to save and never miss your monthly investment for the next 20 years.
History shows that if you missed the best 10 days over the last 20 years, 5035 working days, the average return by investing in the S&P 500 Index would go from 6.1% to only 2.4%, while if you missed the best 50 days out of 5035 the return would be negative -5.5%.
Trying to time the market by buying and selling emotionally does not pay off over the long term. Most individual investors think they can beat the market, just like they can of course beat the roulette wheel, and therefore waste time and money to then find themselves without enough retirement at the age of 60. “Compound interest is the eighth wonder of the world. He who understands it, earns it ... he who doesn't ... pays it.” Albert Einstein To find out how to earn it and to mathematically calculate your retirement needs and achieve your long term objective, contact me now for a free of charge conversation and evaluation.