Compounded growth over time is key from "summary" of All About Index Funds by Richard A. Ferri
When it comes to investing, one concept that cannot be emphasized enough is the power of compounded growth over time. This concept is often overlooked or underestimated by many investors, but it is absolutely crucial for long-term financial success. Compounded growth is the idea that your money will grow exponentially over time as you earn interest not only on your initial investment, but also on the interest that has already been earned. This means that the longer you invest your money, the more it will grow, thanks to the snowball effect of compounded growth. For example, let's say you invest $1,000 in an index fund that has an average annual return of 7%. In the first year, you would earn $70 in interest, bringing your total investment to $1,070. In the second year, you would earn $74.90 in interest, bri...
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