someone commented that the rich can snowball their investments and get richer, while the poor find it hard to do compoundation.Not true.
Let me illustrate.
Say someone invested $2000 in a counter with a 5% yield. So he gets a dividend of $100.
He can spend his family on mao shan wang durians, of course.
But he can choose to invest this. Just regard the broker fees as a one off fee, remember we are talking about investment for long term basis.
As a real example, $100 minus broker fees of $25, gives, $75 left. This can buy 100 shares of a stock with yield of 5% pa worth 75c a piece.
Fast forward 30 years...what do we have..?
At just 10% compoundation, he could be missing out on $1308!!! Or even more.
If i were in that position, I would choose to give up on that mao shan wang....