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Understand the power of compounding from "summary" of The Little Book of Common Sense Investing by John C. Bogle
The power of compounding is a concept that is both simple and incredibly powerful. It is the idea that when you invest your money and earn a return on that investment, the returns themselves also earn returns. This process can lead to exponential growth over time, allowing your money to work harder for you. To understand the power of compounding, consider a hypothetical example. If you were to invest $1,000 and earn a 10% return, you would have $1,100 at the end of the year. If you were to leave that money invested and earn another 10% return the following year, you would have $1,210 at the end of the second year. Over time, this compounding effect can lead to significant growth ...
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