The Power of Compounding: A Report

Written By Compound Wealth

Why Compounding Is the Real Superpower in Investing

This slide deck breaks down one of the most powerful, yet often underestimated, forces in investing: compound interest. From 1 cent doubling over 30 days to the long-term growth of $1 in the stock market, the data highlights how small, consistent gains can snowball into life-changing outcomes - if given enough time.

It also challenges how most of us perceive investment growth, showing how our linear thinking tends to undervalue exponential results. Whether you're just starting out or looking to stay the course, understanding compounding is key to building serious wealth over time.

 
 

What the Data Says About Compounding

  • A small start can go a long way: A single penny doubling daily for 30 days grows to over $5 million. The message? Time and consistency matter more than starting big.

  • Humans are bad at visualising compounding: While 10% annual growth of $10,000 reaches over $67,000 in 20 years, most people guess far less. We're wired to think linearly, not exponentially.

  • The Rule of 72 simplifies things: Divide 72 by your expected return to estimate how long it’ll take to double your money. For example, a 6% return doubles your money in about 12 years.

  • Time in the market is what counts: Since 1950, $1 invested in the S&P 500 grew exponentially, underscoring the value of staying invested over the long term.

  • Reinvesting dividends makes a big difference: Since 1990, $1 in the S&P 500 grew to around $30 with dividends reinvested, versus only $15 without them.

If you’re ready to make the most of compounding and long-term investing, take a look at our advice pages below for more information

 

Compound Wealth are based in Mount Maunganui, Tauranga and offer KiwiSaver, Investment & Retirement Financial Advice to clients all over New Zealand.

Compound Wealth
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