Compounding as a way of building wealth and value (opens in new tab)

Yeah the problem is there is no single investment that will happily grow 40% a year and reward you for doing nothing. At that rate of risk, expect any of a number of things to happen before Year 42:

- You get scammed/cheated

- Company goes bankrupt

- Fund goes bankrupt/fails

- The currency one invested in fails to keep up

- You need the money (life isn't perfect, and a few million dollars at year 20 can solve a lot of problems)

- You stop being greedy and are happy with the cumulative returns

I recall the expected rate of return on investments (measured over decades) to be closer to 5% than 40%. Nonetheless, compounding does work - it just takes a little more capital and a little longer.

If someone can tell me how to make 40% annually consistently for 42 years, I'm happy to put in $1k and wait