AI-powered
podcast player
Listen to all your favourite podcasts with AI-powered features
1min snip
TIP664: The Nomad Investment Partnership Way: Quality In Business and Beyond w/ Kyle Grieve
We Study Billionaires - The Investor’s Podcast Network
Compounding: The Asymmetric Nature of Growth and Decline
Over five years, an investment of $1 can grow to approximately $1.62, yielding a compounded annual growth rate (CAGR) of around 26% if purchased at a 50% discount. Even with potential mistakes impacting this growth, a flat performance across holdings could still result in a CAGR of about 13%. The essential lesson is the asymmetrical effect of compounding: while one investment compounding at 26% annually can grow significantly, another compounding at negative 26% will drastically decline. This contrast illustrates that investments don't merely offset each other; rather, the compounding effect leads to vastly different financial outcomes. For instance, an initial $20,000 split between a positive 26% investment and a negative 26% investment results in a total of about $100,500, reflecting a CAGR of 18%. The understanding of compounding reveals its profound impact on long-term investment returns, highlighting the non-linear nature of growth versus loss.
00:00
Transcript
Episode notes
Get the Snipd
podcast app
Unlock the knowledge in podcasts with the podcast player of the future.
AI-powered
Discover
highlights
Listen to the best highlights from the podcasts you love and dive into the full episode
Save any
moment
Hear something you like? Tap your headphones to save it with AI-generated key takeaways
Share
& Export
Send highlights to Twitter, WhatsApp or export them to Notion, Readwise & more
AI-powered
podcast player
Listen to all your favourite podcasts with AI-powered features
Discover
highlights
Listen to the best highlights from the podcasts you love and dive into the full episode