We have all seen the wonders of compound interest. Which is why it is commonly termed as the ‘8th wonder of the world‘. And this can also be seen in the graph below. Extracted from Robert Shiller’s S&P 500 data It shows the nominal growth of the S&P 500, a prominent US stock market barometer, in the last 150 years. What’s interesting about the chart is that the S&P 500’s growth accelerated over time. That’s exactly how compounding works. Nominal growth starts off slow but increases over time. The chart below of the S&P500 over the last 150 years shows the same thing as above but in logarithmic form. It gives a clearer picture of the percentage returns of the stock market over the same time frame. Extracted from Robert Shiller’s S&P 500 data The log-chart of the S&P 500 over the past 150 years is a fairly straight...