The power of Compounding

Heart disease has declined 1.5 percent per year, and if that news is on the internet, it is not likely to go viral. But what is overlooked is the compounding effect, which is invisible in the short run, and only noticeable after 15 to 20 years.

At first glance, compounding does not look remarkable. However, looking at compounding in action, you will notice a few things.

Consider, for example, investing in stocks at an average real return of 6.8%. (It is inflation-adjusted.) During the first few years, compounding doesn't real...

Would you rather have (A) $3 million upfront or (B) one penny that doubles in value every day for 31 days?

Choose any one!!

To maximise your gains, the correct answer is (B). But it doesn’t happen quickly. After 19 days you’d still only have $5,243 and you might feel pretty foolish ne...