The Power of Compounding

Compounding on small returns but repeated many times can also be a powerful way to generate wealth over time. This is because even small returns can compound into significant amounts when they are reinvested over long periods.

For example, let’s say you have $10,000 to invest and you find an investment that will earn you a 6% return every trade. After the first trade, your investment would have grown to $10,600 ($10,000 + 6% of $10,000). If you reinvest this amount at the same rate for another trade, your investment would grow to $11,236 ($10,600 + 6% of $10,600), and so on.
After 80 trades, your investment will have grown to over one million dollars:
$10,000(1 + 6%)80 = $1,057,960

Compound growth is exponential growth which is much more than arithmetic growth: $10,000(1 + 6% x 80)= $58,000

Compound Return Calculator:

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You make profits not only on your original investments but also on reinvestment of gains that accumulate — so your money can grow faster and faster as time rolls on. The power of compounding shows how repeated, and consistent small profits can grow to significant gains.