Do Stocks Earn Compound Interest? - Episode 221

The Practical Wealth Show · May 26, 2022 · 13m

This episode is going to talk about the "Miracle of Compound Interest".

Financial advisors constantly use compounding interest calculators to project and predict future values for their clients. The problem with that is that stocks, bonds, and mutual funds don't compound interest. In fact, no investment does. Stocks don't compound interest. They appreciate and they depreciate in value. That's not the same as compounding interest.

Understanding this truth also sort of demolishes the entire use of the phrase, "the miracle of compound interest" (supposedly by Einstein), as it relates to…