The Dangers of Negative Compounding
Compounding is one of the most powerful tools in wealth building. By allowing returns to generate additional returns, it creates a snowball effect that can significantly enhance an investor’s portfolio over time. However, compounding can also work in reverse when markets decline, and this negative compounding can likewise drastically reduce long-term portfolio growth. Fortunately investors can mitigate these dangers and...
By: Indexopedia Research Team | December 10, 2024
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