Here’s an amazing article I found on the power of compounding. You can check it out in this wonderful blog “money FYI”

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moneyFYI

We are all looking for easy ways to accomplish useful things.  Well here is a way to be a millionaire without winning a lottery.

Take $1,000, invest it at 5% and wait 141 years and 7 months.  Only 73 years if you can get 10%.

If you have only $100 you can get there in a little less than 189 years at 5% and 97 years at 10%

If you are in a high tax bracket, 5% is what is left over after taxes are paid on 10%

The important lessons here:

  1. By having ten times more capital, you reduce the time by less than 25%
  2. By doubling the yield you can about halve the time
  3. Yield and time matter more than the principal amount.
  4. Be very conscious of things that reduce the yield
    1. Investment fund MER
    2. Taxes can reduce yield by almost half.  Avoid taxes
    3. Tax-free growth is good. …

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