Let your wealth grow

The rate, size, at which the wealth will grow, and how long a time it takes, depends on a number of factors:

- How much is one’s monthly deposit. The more one saves the bigger the wealth. Over the years if the monthly income increases (better paying job, etc.), It’s a good idea to increase the monthly savings.

- Market performance. On average, over long periods of time, there are more bull markets than Bear markets, ergo, one’s wealth will grow.

- Perseverance, yearly annual returns can vary 20%, 30%, 40 %, either way. Do not pay attention to the short term results. In this context, they are just “statistical noise”. As I pointed out earlier, over 10 years ( 2011- 2020) the S&P500 had an annual average return of a bit more than 13%(assuming the dividends were reinvested).

- The longer the time one saves, the bigger the wealth will be.

On a side note,in bear markets,when almost every investor is under stress, the one that follows this strategy walks around with a big smile on his face. As an hypothetical example, if one invests 1000$ and purchases 100 units of S&P 500,when the Market drops by 50% the same 1000$ will purchase 200 units. When eventually the market goes up to the original price in this example, those 200 units have a 100% profit.

Come to think of it, the bear market is the place where this system creates wealth at accelerated rates.