Column argues compound interest creates more millionaires than increasing income or cutting expenses
SNDK Sandisk Corp
$1260.93 -8.51%
View chart & analysis → - 1A column has been released stating that compound interest is more advantageous for long-term wealth building than increasing income or reducing expenses.
- 2Micron rose more than 4 times in one year, Sandisk rose approximately 800%, and the S&P 500 has a 3-year annualized return of 22.9%.
- 3If 22.9% per year continues for 5 years, 500,000 dollars becomes 928,166 dollars, and compound interest works better with larger portfolios.
So what's the key point?
When money grows, interest is also earned on that grown money. Therefore, the author believes the compound interest effect becomes larger as the amount of money already saved grows larger.
Source The Motley Fool +1 · View original ↗
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