CPM Investing LLC - Research Publications
WHY WE DO THIS - THE MIRACLE OF COMPOUNDING
“Compound interest is the eighth wonder of the world. He who understands it, earns it... he who doesn't, pays it.” - Albert Einstein
The goal of Focused 15 Investing is to improve your returns by at least 5 percentage points a year over a 15-year period. If you do, you will have twice the amount of money at the end of that period than you otherwise would – simply because of the miracle of compound returns.
The table shows that higher returns produce dramatically improved increases over time.
- At an annual rate of return of 5%, a portfolio is 2.1 times its initial value after fifteen years.
- At an annual rate of return of 10%, a portfolio is 4.2 times its initial value after fifteen years – in other words, twice the return.
For example:
- After fifteen years, an initial investment of $100,000 grows to $210,000 at a 5% annual rate of return.
- After fifteen years, an initial investment of $100,000 grows to $420,000 at a 10% annual rate of return.
This is simply the math behind the miracle of compound returns. Focused 15 Investing gives you a reliable way to benefit from the miracle of compounding in your retirement accounts.
