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Compounding is the most powerful force in investing from "summary" of The Psychology of Money by Morgan Housel
The most influential force in finance is the simplest concept to understand, yet one of the hardest to embrace. Compound interest is the ultimate example of how small things can accumulate into significant wealth over time. It is the snowball effect of money, where the more you have, the more you earn, and the cycle continues to grow exponentially. Despite its straightforward nature, many people struggle to grasp the power of compounding. They are often consumed by the desire for quick gains and immediate gratification, failing to see the long-term benefits of patience and consistency. This impatience can lead to poor financial decisions and missed opportunities for wealth accumulation. The magic of compounding lies in its ability to turn time into money. By allowing your investments to grow over extended periods, you can benefit from the exponential growth that co...
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