Invested money grows exponentially, the combination of a reasonable rate of return and the passage of time will result in a satisfying creation of wealth
In 2005, the novelist David Foster Wallace gave a commencement speech at Ohio’s Kenyon College. He began:
Mr. Wallace went on to say that the point of the fish story is merely that the most obvious, important realities are often the ones that are hardest to see, and to talk about. How does this apply to investing? Well, investing is simply putting money aside today with a view to getting back more money after some time has elapsed.
Your time period can vary far more than your rate of return. Let’s assume your very long-term rate is 8 per cent. That will multiply your money 2.2 times over 10 years. However, it will multiply your money more than 10 times over 30 years, and more than 100 times over 60 years. And so on. It’s primarily time that drives the only return that matters.