3 ms·

I'd like to see a stock that reliably compounds in the way described. It'd be a killer. What I see is at best stable few percent smoothed compounding. Not 100%.

I'd like to see a stock that reliably compounds in the way described. It'd be a killer. What I see is at best stable few percent smoothed compounding. Not 100%. Please consider historical variance at the very least which vastly outstrips APR. Losses get compounded to and there are major opportunity costs when you actually need cash for any of various reasons. I have seen people get totally wiped out in a market crash. Some of them managed to keep property they owned. History is not on anybody's side. Companies can fall too. Houses can be incorporated or stolen or get dilapidated.

raspasov 9y ago
You don't buy a single stock, you buy a basket of stocks which reduces the risk of some companies failing or losing value. Absolute minimum 5, preferably 10+ or an ETF which effectively combines dozens or hundreds of companies under one ticker. It's easy to find one stock with way better returns than what I described over the long run, say 20+ years (example AAPL). It's also easy to find a stock that's way worse over 20 years (example HPQ). You have to keep up with that, sell the companies which are not good anymore, buy new ones, etc. That's why an ETF is an "easy way out" for a small fee (usually 0.1% of the money invested or lower). You can check the historical returns here and do the numbers for this ETF https://personal.vanguard.com/us/funds/snapshot?FundId=0970&FundIntExt=INT&funds_disable_redirect=true https://personal.vanguard.com/us/funds/snapshot?FundId=0970&... . You'll find it's very close to what I am describing.