Compound growth
Compounding is growth on top of previous growth, which is why time invested matters more than the size of any single year.
$1,000 growing 8% a year is $2,159 after ten years and $10,063 after thirty. The extra twenty years add far more than the first ten, because each year's gain earns gains of its own.
The practical consequence for anyone young: starting early beats picking well. A decade of ordinary returns is worth more than a brilliant year, and it is the one advantage a teenager has that a professional cannot buy.
In Stoxhatch
A few weeks of simulated trading cannot show compounding. It is the reason the app scores patience and process instead of who gained the most this month.
Related
- Simulated cash — Simulated cash is fake money used to practise investing at real market prices, with nothing to deposit and nothing to lose.
- ETF — An ETF is a single tradable share that holds a basket of many companies, so buying one gives you a slice of all of them.
Try it with $10,000 of simulated cash, no signup needed — or browse the rest of the glossary.