Chart of the month
Compounding power works for everybody
2 June 2021
The below chart was used for a group of students that will enter work-life this summer. Even with a relatively modest savings rate of 3-5% of annual gross wages and a return rate of 3% to 10% these students (and any other persons that can save money) stands to be financial independent in the long term
The chart below is OMXC20 index that have delivered 10% return per year excluding dividends. Now, OMXC20 includes winners like Coloplast, DSV and NovoNordisk, which helped performance.
It's obviously difficult to identify long term winners for the next 30-40 years, so identifying a good region (good corporate culture and inspiring innovation) could be one way forward.
You can also just choose MSCI World which has delivered 7% per year since 1970 and even with a likely 6% (incl dividends) return profile things can work out nicely in the long run.
Go for stocks the higher return rather than bonds and cash deposits, obviously only if you can live with the occasional volatility
The thin blue line is KFX/OMXC20 from 1990 to 2021
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