The Power of Compounding - Deepstash

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The power of compounding ~ Get Rich Slowly

The Power of Compounding

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 really do much. After ten years, your initial investment would nearly double. After 16 years, your initial investment would triple, and in 20 years, it will quadruple. By year 40, you're earning more than your initial investment every year.

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Common investment questions
Common investment questions

Two of the most common investment questions are "what do you invest in " and "what are the best investing strategies"?

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Shady investment advice

Bad investing advice can come from many quarters, such as wealth expos or financial advisors. If anyone promises you any type of return over 12%, 99% of the time, they are probably playing you.

There are great financial advisors out there, but many people who sell investment products just want your money. However, it's not that hard to invest for yourself.

How to avoid bad investment advice
  1. Never buy a financial or investing product from someone you just met.
  2. Getting returns over 12% per year is ridiculously hard. If it sounds too good to be true, it is.
  3. If you don't understand it, don't invest in it.
  4. If one of your friends recommends an investment that's making them a lot of money, they are probably suckers too. If you see the "results not typical" on any marketing materials, move on.
  5. There are no "secrets of the super-wealthy" that anyone will sell you for $500 or that you can take advantage of unless you have hundreds of thousands of dollars.
Smart retirement planning boils down to a few simple truths.
  • Time is on your side.  The earlier you start saving money, the more time you give compounding to work for you. 
  • Take risks when you're young.  Althoug...
6 ideal investments for beginners
6 ideal investments for beginners
  1. If you have a 401(k) or another retirement plan at work, it’s very likely the first place you should put your money— especially if your company matches a portion of your contributions.