Getting started in the US market
The centre of Western culture and commerce, the US market provides so many opportunities to investors. Read into the long term gains the US market can provide.
Investing as a way of wealth generation is commonly spoken about, but let’s understand why it can be so powerful.
It all comes down to compounding returns; or the “eighth wonder of the world” as Einstein put it. This may be elementary stuff to some, but for those who don’t know, compounding returns occur when you earn gains on your gains.
For instance, $1,000 compounding by 5% every year is worth $1,102.50 after 2 years rather than $1,100.
In the short run the gains are minimal. In the long run, consistently building your portfolio can prove incredibly worthwhile.
Adding small to moderate amounts monthly can grow to huge figures when compounding by the S&P500’s average return of 9%.
The chart above shows the long run portfolio balance of a $2,500 portfolio adding $100, $200 and $500 monthly. The portfolio invests in the S&P500, a basket of 500 of the US’s biggest stocks. With commitment, these figures can reach hundreds of thousands over time. Over 40 and 50 years these figures can reach significant sums.