“Slow is smooth and smooth is fast” – US Navy Seal maxim
Compounding returns is the real magic of investing. Investors who dollar cost average into the market (i.e. consistently invest at fixed incremental intervals through the year) and let their portfolios compound over time will do very well in the end. When you dollar cost average into a market you tend to care a little less about the risk of a market correction because you will be a buyer through it. Keep the faith. This strategy works. $100,000 invested in annual $3,300 increments over 30 years gets you to $333,541. Keep putting $3,300 away each year at 7% over 55 years leaves you ~$2 million.
Say someone committed $100,000 today to a foundation payable in 140 years and it earned 7% over the 140 years. The foundation gets $1.3 billion. That’s just four generations. This stuff matters.
The table below illustrates the product of investing $500,000 for 5, 10, 15 and 20 years at annual rates of return ranging from 4% to 14%.
| $500,000 | Rate of Return | |||||
| Years | 4% | 6% | 8% | 10% | 12% | 14% |
| 5 | $608,326 | $669,113 | $734,664 | $805,255 | $881,171 | $962,707 |
| 10 | $740,122 | $895,424 | $1,079,462 | $1,296,871 | $1,552,924 | $1,853,611 |
| 15 | $900,472 | $1,198,279 | $1,586,085 | $2,088,624 | $2,736,783 | $3,568,969 |
| 20 | $1,095,562 | $1,603,568 | $2,330,479 | $3,363,750 | $4,823,147 | $6,871,745 |
Making It Happen 
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