How index funds work: why doing nothing beats most experts
Compound interest and the rule of 70: how long it takes money to double
Money that grows by the same percent every year does not add the same amount every year. Over 30 years, the last ten add more than the first twenty. Why does money speed up the longer it waits, and how fast does it double?
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1
Ten years after your first day, your statement says about $20,000. You never added a cent. Your $10,000 almost doubled on its own.
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2
You know the reason from school: compound interest. Each year's gain stays in the fund and earns gains of its own. At 7%, the $700 of year one earns $49 more in year two.
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