Compounding: The Secret to Wealth

Financial experts at Charles Schwab just dropped a simple breakdown on why compounding

is the real MVP in investing.

Picture two folks each dropping $10,000 into the market on the same day, earning 7% a year

for 30 years, no extra cash.

Added, one pulls out the $700 and yearly earnings to spend ends up with just $21,000 total

interest.

The other reinvested all and walks away with $66,123 over three times more.

That gap starts tiny, but explodes later, as reinvested money earns on itself year after

year.

Schwab amps it up in another scenario, start with $100,000 add $10,000 annually at 7%.

Cash out after 15 years, you got $527,193.

Hold for 30, it's $1,705,833.

Those extra 15 years triple the pot, mostly from compounding magic.

In real life, the S&P 500 has averaged about 10% yearly since 1957 or 7% after inflation

right on.

Schwab's number.

But too many Americans miss out.

One in four non-retirees, guys zero savings, median 401k balance is just $38,100, $76.

Savings rates hover at 4.5% half the long term norm.

Schwab lays out three straight forward rules to lock in those gains, kick off investing

as early as possible since lost time can't be bought back, reinvest every dime automatically,

most accounts let you flip that switch for free, and dodge big wrists that wipe out years

of growth, like staying diversified through the dips, bottom line.

You don't need a fat stack or fancy advice, just time, patience and consistency to let

compounding build your wealth.

Make your accounts today, crank up contributions and watch it grow.

From your city, powered by AI, this is Durham News Today.