How much can you make by saving and compounding

RealMalatesta

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Quote from: paxmao on March 18, 2021, 02:23:59 PM

Independently of the style of investment (crypto, fixed income, variable rent, high yield, ...), it is good to take a look about what compounding can do for you. Please, note that you would need to subtract inflation and that can be big in some countries if you only invest locally.

Compounding must be an amazing way to gain over the time but I guess no investment opportunity do grow over the time; only bank deposits for interest gaining will grow over the time. I believe we are all already into compounding by long-term holding along with buying at dips. After 2017, bitcoin never has fallen below $3k hence if you are holding since 2017 and buying at dips then you might be enjoying compounding in crypto space. Yeah, holding with long term plan is nothing short of compounding.

Quote from: paxmao on March 18, 2021, 02:23:59 PM

These are very simple simulations that shows you how far can your saving and investing go. In each one you put an initial amount on an investment and then you add a bit more each year.

Your simulations are good but I like to see them for bitcoin investments. We can easily do that for a signature campaign participant who is participating campaigns for years as they get chances to hold and bigger chances to add time to time.

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Quote from: Tytanowy Janusz on March 25, 2021, 03:38:11 AM

Quote from: Poker Player on March 21, 2021, 07:30:20 AM

Good luck with picking undervalued stocks. There are thousands of funds around the globe try to pick the best undervalued stocks and they don't outperform the S&P 500.

1- Majority of them
2- did not outperform S&P500 during "gaminied investing around bubble of everything" during best USA era.

Nothing will last forever.

That is why index funds are so attractive. If you take the costs of buying and selling individual stocks into consideration, or even the management fees of active managed funds, then you need to out perform the market by a few percent each year. Nonetheless owning stocks was very profitable in almost every year in the past. The returns are much higher than what you get for savings account or money market fund.

Kong Hey Pakboy

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Quote from: jerry0 on March 26, 2021, 03:20:53 AM

Isn't the issue here you need to withdraw some part of the money at some point for expenses?

You will get penalties if you withdraw it and there is no some part of the money invested when it comes to investing outside of bitcoin, you will have to withdraw it all out. The point of compounding is to grow your money on a long-term basis. You also shouldn't be investing if you are going to spend it in the end, you have to have a considerable amount of money so you can invest without the worry of withdrawing the money.

jerry0

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Isn't the issue here you need to withdraw some part of the money at some point for expenses?

Tytanowy Janusz

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Quote from: Poker Player on March 21, 2021, 07:30:20 AM

Good luck with picking undervalued stocks. There are thousands of funds around the globe try to pick the best undervalued stocks and they don't outperform the S&P 500.

1- Majority of them
2- did not outperform S&P500 during "gaminied investing around bubble of everything" during best USA era.

Nothing will last forever.

casperBGD

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Quote from: Tytanowy Janusz on March 18, 2021, 02:47:03 PM

~snip

No. Sp500 is not "a quite safe investment". It is 'dancing on a knife's edge'. Remember "past performance is no guarantee of future results"

it is true, nothing is a quite safe investment, and SP500 is not either
but, looking at long term, SP500 should follow industry progress, and should bring some ROI on your investment, good or bad, that is a question

what all of those do not mention, is that with 6% you are actually losing money, since 2% inflation is merely calculated with bread and milk prices, and you would not buy just bread and milk, with all investments in the bag, inflation is rather 7-10%, not below 2% - just looking real estate and stock prices, since those are the one which you will invest your money, not in the tone of bread

with all said, it is hard to find good investment, and all are risky
this does not seem as best time to put your money in stocks, but it is not the best time to keep it with you either, what do you propose as alternative?

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Quote from: Kakmakr on March 21, 2021, 03:07:01 AM

Compound interest is great, but with interest rates being so low, it is not an Inflation beater. Roll Eyes

It would have been interesting to see if someone made a comparison between someone buying $100 worth of bitcoins every month, since 2010 and someone saving $100 with interest in a Bank with compound interest. Roll Eyes

I bought bitcoin when the price was between $300 to $400 and I sold some of those bitcoins at $47 000 ..... Do you think compound interest would have given me higher returns on my investment if I simply left it in my Bank account with compound interest? (Noooo way in hell) Grin

You just have to choose the right one to invest in like Index funds or stocks which has a steady growth of around 5 to 6 percent and Warren Buffett loves Index Funds because it gets more profit on the long term compared to actively managed funds. Compound interest looks small because it is in annual based but if you were to consider holding long term, that compounding goes high although it will not be as big as crypto but it is a money that already insured and has the government backing so you don't have to worry about it.

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Quote from: Poker Player on March 21, 2021, 07:30:20 AM

Quote from: stompix on March 19, 2021, 02:26:28 AM

~

I understand what you say about the pension system being a kind of Ponzi scheme, but applying it to markets is based on the fallacy of seeing wealth as a pie rather than a field of fruit trees. Wealth is the bundle of existing goods and services. If we create more and more goods and services and conserve some of the goods that were produced in the past, we can all become richer and richer. So this is not a zero-sum game where for me to win you have to lose. We can both win.

But you can't win indefinitely at the same pace.
Wealth is also limited, global wealth increase is simple when you have an increasing population and a lot of it is going from the lower class to medium income and from there to higher income levels but that will not work endlessly.

First, the population growth is in decline meaning the demand for goods will also show a decline in growth, you can't have double the consumption with the same population, even if those people have more money to spend it will hit a bracket when there is no more growth, you can't have more cars than your population driving around, you can't have more tourist a year than the world population, and there will never be a whiskey consumption of 20 tons per person no matter the wealth of the world.

But, there is a second trigger, and here we were talking about investing and saving and I was saying from the first post that it will not work if everyone will be saving because if everyone does this there will be no more people spending, there will be no increase in demands for goods and services, there will be no companies reporting earnings over earning, your orchard will produce a lot of fruit nobody is interested in buying since everyone is planting trees and growing fruit.

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Quote from: Kakmakr on March 21, 2021, 03:07:01 AM

Compound interest is great, but with interest rates being so low, it is not an Inflation beater. Roll Eyes

It would have been interesting to see if someone made a comparison between someone buying $100 worth of bitcoins every month, since 2010 and someone saving $100 with interest in a Bank with compound interest. Roll Eyes

I bought bitcoin when the price was between $300 to $400 and I sold some of those bitcoins at $47 000 ..... Do you think compound interest would have given me higher returns on my investment if I simply left it in my Bank account with compound interest? (Noooo way in hell) Grin

Compound interest and investment are different things. You still made more money than anyone made from investing as well, but what you should compare is buying a stock and holding it or buying gold and holding it, those didn't earn that well during this period neither but if you were smart enough to pick the right stocks you could have made more than compound interest in the banks as well.

Compound interest in banks is something only the people who are not sure about what to invest does, they prefer safety and they do not invest it, they just leave it there to accumulate, they are not after making a profit, they are thinking "well the other option was making zero", because they are not investing it. But you invested into bitcoin, you took a risk, and that risk is zero in compound interest, which is why you deserved more money when that risk paid off.

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Quote from: so98nn on March 19, 2021, 11:05:33 AM

There are many government schemes and if we start them at the right time then one could actually get bigger returns for sure.

Government scheme is not the best place to do these kind of analysis because not everybody can get into government and that scheme is also automatic for the government employees who are lucky to have government job because monies will be deducted automatically for the purpose of retirement while you get monthly payment also.
Like the pension scheme, your money is sent into it for you but for individual who is not employed by the government, this is a difficult task to do if such person is not prudent and wise to invest. Early investment is good but not many are employed at this early youth age and that is why you have large number of poor old people especially in third world countries.

Johnyz

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Quote from: Kakmakr on March 21, 2021, 03:07:01 AM

Compound interest is great, but with interest rates being so low, it is not an Inflation beater. Roll Eyes

It would have been interesting to see if someone made a comparison between someone buying $100 worth of bitcoins every month, since 2010 and someone saving $100 with interest in a Bank with compound interest. Roll Eyes

I bought bitcoin when the price was between $300 to $400 and I sold some of those bitcoins at $47 000 ..... Do you think compound interest would have given me higher returns on my investment if I simply left it in my Bank account with compound interest? (Noooo way in hell) Grin

I'd rather do the cost-averaging in stocks/cryptomarket than to do it on bank because savings account with the bank will never make you reach since the interest is very low and the inflation rate continues to rise over time. If you want a sure long term profit investing, then this can be a good option but if you want to have a more active, and profitable investment for your retirement, choose the best market for that.

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Quote from: Tytanowy Janusz on March 19, 2021, 02:21:58 AM

Quote from: Poker Player on March 19, 2021, 12:53:33 AM

If the Sp500 is not a safe investment, nothing is. [...] Companies work if they beat inflation, otherwise they tend to disappear. What will the 500 largest U.S. companies do in the next 30 years? If we discount events such as the coming of the third world war, it is normal that they will continue to grow and beat inflation.

Undervalued value stock are much better (there are value and growth stocks).

Good luck with picking undervalued stocks. There are thousands of funds around the globe try to pick the best undervalued stocks and they don't outperform the S&P 500.

Quote from: Tytanowy Janusz on March 19, 2021, 02:21:58 AM

Quote from: Poker Player on March 19, 2021, 12:53:33 AM

Past results, of course, do not guarantee anything, but they serve as a guide.

You are looking back to a times where stock markets and real economy were totally different as they are now.

It's always different. That was said also 5, 10, 50 and 100 years ago.

Quote from: stompix on March 19, 2021, 02:26:28 AM

Quote from: Poker Player on March 19, 2021, 12:53:33 AM

This example is too exaggerated. We have no rational reason to think so. We might as well stop going out on the street just in case we get hit by a lightning and it kills us.

Why?
This what happens with the pension system, contributions go down and spending goes up as the population grows older on average.
The same will happen on any system that needs constant money inflow, in order for somebody to make a profit somebody must come in with that money, when everyone is making a profit, where is the money coming from?

I understand what you say about the pension system being a kind of Ponzi scheme, but applying it to markets is based on the fallacy of seeing wealth as a pie rather than a field of fruit trees. Wealth is the bundle of existing goods and services. If we create more and more goods and services and conserve some of the goods that were produced in the past, we can all become richer and richer. So this is not a zero-sum game where for me to win you have to lose. We can both win.

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Quote from: virasog on March 21, 2021, 12:38:26 AM

Quote from: ?? on ??

contained how much we invest

You can invest with whatever amount you can afford. There is no hard or fast rule for the minimum amount of investment and saving in bitcoins.
Even if you invest less in bitcoin and apply the compounding strategy, it will be beneficial for you in the long run.

I am behind on you in investing because only we will know how much money we should use to invest in anything we want, whether investing in bitcoin or the other type of investment. In this matter, I think consistency will be necessary to always invest in bitcoin and for how long we will invest. Maybe we can use monthly to buy bitcoin in some amount of money, and we always do that every month for one year. That can make us have bitcoin, and when we can reach one year and the price increases, we will profit from the money we use to invest.

Tytanowy Janusz

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Quote from: Kakmakr on March 21, 2021, 03:07:01 AM

Compound interest is great, but with interest rates being so low, it is not an Inflation beater. Roll Eyes

It would have been interesting to see if someone made a comparison between someone buying $100 worth of bitcoins every month, since 2010 and someone saving $100 with interest in a Bank with compound interest. Roll Eyes

I bought bitcoin when the price was between $300 to $400 and I sold some of those bitcoins at $47 000 ..... Do you think compound interest would have given me higher returns on my investment if I simply left it in my Bank account with compound interest? (Noooo way in hell) Grin

Yea but you compare 2 completely different things. Little to zero risk investment (but still some) with high risk investment. I can go even further with this logic. My friend bought a lottery ticket and won. 3$ investment turned into 1 mln $ in 1 day. Try to do it with bitcoin "(Noooo way in hell) "

Kakmakr

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Compound interest is great, but with interest rates being so low, it is not an Inflation beater. Roll Eyes

It would have been interesting to see if someone made a comparison between someone buying $100 worth of bitcoins every month, since 2010 and someone saving $100 with interest in a Bank with compound interest. Roll Eyes

I bought bitcoin when the price was between $300 to $400 and I sold some of those bitcoins at $47 000 ..... Do you think compound interest would have given me higher returns on my investment if I simply left it in my Bank account with compound interest? (Noooo way in hell) Grin

Tytanowy Janusz

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Quote from: jaysabi on March 20, 2021, 11:25:04 PM

Even when you factor in huge corrections that the market invariably suffers quit frequently, the stock market returns an average of 10% per year. The longer you're in the market, the better off you are statistically because the effect of corrections is smoothed out of recognition over long periods of time.

Yea its so funny to lock my investing capital for 10 years to ... break even XD Or ... in fact, be 20-30% short thanks to inflation and a decline in purchasing power of my money.

Investing is not as easy as you guys think. I suggest you all to read this book:
The Black Swan - The impact of the Highly Improbable.

When you are experienced investor you know that something Highly Improbable is about to happen when retail investors, a nutrient for big fish, is super confident about any investment type. Time will show. It is possible that nothing bad will happened, and we will see ~10% annual growth in next 50 years. It is also probable that we will see strong 70-90% crash and recover to break even after 50 years (in fact still -90% thanks to inflation).

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It seems to me very exciting to get a comfortable retirement, yes, this saying is absolutely correct. It is mainly about time. All those who sold bitcoin early are very regretful and wish they had kept it until now, not only Bitcoin but many altcoins have achieved amazing heights. at the long term.
In any case, this is really an interesting strategy. It is not necessary to store bitcoin. You can invest in any currency in the long run and you are sure to get amazing results. But I would like to point out that this will not work in countries that suffer from major economic problems, because investment in the local currency will be a loss in this case because this currency constantly loses its value over time.

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Quote from: ?? on ??

contained how much we invest

You can invest with whatever amount you can afford. There is no hard or fast rule for the minimum amount of investment and saving in bitcoins.
Even if you invest less in bitcoin and apply the compounding strategy, it will be beneficial for you in the long run.

jaysabi

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Quote from: Tytanowy Janusz on March 18, 2021, 02:47:03 PM

Its funny. Recently I've seen few people talking about that a lot. Few youtube videos. Even whole youtube chanel focused on similar strategy - https://www.youtube.com/watch?v=vffTJV0IzHM

Why its funny? Because we are currently during "bubble of everything". Not only bitcoin is mooning. Everything is. And now, when people like Michael Burry (Big short movie was based on his prediction of 2008 crash) is screaming to watch out - 'Big Short' investor Michael Burry says the stock market is 'dancing on a knife's edge' - and fears he's being ignored again YouTubers appeared out of nowhere, now, with approach that - market is super easy - just buy whatever and hodl. Why not 10 years ago? We have a record number of retail investors on the markets. Even high schools students have robinhood installed and gamble their savings. Mostly on popular stocks, mostly sp500. Every experienced investor should see a red light here. Its not good time for investing in the most overvalued stocks (SP500)

Quote from: paxmao on March 18, 2021, 02:23:59 PM

For each case, you get the final amount on money you get depending on the average yield that your investment gives you (this not mathematically accurate, but is good enough. For example, the SP500 index in the past usually yields 6% and is considered a quite safe investment. I have calculated for 6%, 12% and 18%. I call this, the boring 6%, the "nice 12%" and the "the gods love me much 18%" average yield a year.

No. Sp500 is not "a quite safe investment". It is 'dancing on a knife's edge'. Remember "past performance is no guarantee of future results"

Even when you factor in huge corrections that the market invariably suffers quit frequently, the stock market returns an average of 10% per year. The longer you're in the market, the better off you are statistically because the effect of corrections is smoothed out of recognition over long periods of time.

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This is provided that you have the necessary consistent funding that you will then save and compound. Some people don't have that luxury although it is inarguably a good way to earn in this market. There are plans and techniques on the other hand that could solve this money issue, which the poor should know more about.

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