Rate of return trumps initial capital for any long-term horizon. Do the math of that: $100 initial capital invested at 50% annual returns becomes $330K after

Rate of return trumps initial capital for any long-term horizon. Do the math of that: $100 initial capital invested at 50% annual returns becomes $330K after 20 years. This is like a successful startup on its growth curve, or some of the very best hedge funds (eg. Medallion). It's less than most cryptocurrencies (eg. Bitcoin has returned about 70% annually over the last 7 years). $10K at 20% annual returns becomes $383K after 20 years. This would be a very good active investor or someone who hits a hot company. Most FAANG stocks have returned about 25% over the past 10 years. $100K at 7% annual returns becomes $386K after 20 years. This is a typical index fund return. $250K at 2% annual returns becomes $371K after 20 years. This is a typical high-yield savings account return. $1M when you lose 5%/year becomes $358K after 20 years. This is typical of somebody who holds mortgages or student debt where their asset value & income isn't increasing, or someone who has credit card debt equal to a quarter of their net worth. Most people underestimate the power of compound interest and exponential growth, which is one of the things that a financial literacy course really needs to teach.