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Compounding
This is just one of those things that I thought would interest you. Although I doubt the circumstances told here would portray any of us, it is a good idea of how compounding works in spite of what you may otherwise think. President Jackson once gave a gift to the Sultan of Muscat (sounds like a microbrew, doesn't it?). It was an 1804 silver coin and was nicknamed the "Sultan". The "Sultan" was bought buy the family of rich folks from Vermont in 1945 for $5000. The coin was then placed in a vault somewhere where it didn't see the light of day for the next 54 years. Until, of course, it was auctioned off for 4.14 million dollars! Wow, you might just say to yourself. Why am I investing in mutual funds when I could be buying rare and old coins. I'll tell you why you shouldn't. If those collectors had taken the same cash and invested it in a mutual fund indexing (copying) the Standard & Poors 500, with the dividends reinvested, they would have made about $400,000 more. And that would be without paying the auctioneer and the 15% buyers fee.
Now, you don't have to plunk five grand down and wait fifty four years for the pay off. Plunk a hundred down, and do it consistently for months and even years, and you will have benefited from similar compounding results. But in the meantime, I'm going to check the change jar in the kitchen.
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