This is going back to the basics 101.
All of us are aware why compounding is one of the wonders of the world.
By now, most investors would have known the effect of compounding over time and how they can exponentially grow their wealth to incredible amount, if done correctly.
Compounding returns which are positive year after year feels great, especially in an environment where the market allows us to do so. But too often we get attached to statistics and numbers and thereafter starts to erode our euphoric emotions that allow us to somewhat extrapolate the same returns over the next 40 years. Is that realistic?
This is exactly how insurance agent attempts to sell product because it just looks too attractive 40 years down the road and often folks fell for such thing.
Dark Side Of Negative Compounding
The dark side of compounding is often neglected ...