The importance of re-investing (compounding)

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I made a few graphs for those of you who choose to withdraw the profit from trading. It displays the importance of re-investing the gain we made and will be making in the future.

This post was made for my Zignaly followers who have to choose between re-investing or withdrawing their profit. But compounding is important for any investment you do in your life.

Taking out your gains will have a huge impact on your returns over only a few years

This is an example of 5-year investment making an average return of 20% a year:

5 year compounded interest returns versus simple interest

This one shows the same settings but for 10 years:

10 years compounded interest returns versus simple interest

20% is conservative as this strategy will probably outperform that.

Let’s see what it does on a 40% annual return:

5 years compounded interest returns versus simple interest. High interest rate

At this pace, in 5 years, a compounded investment does 300% more than a simple return (withdraw) investment.

No matter if you invest with me only or with other traders or financial institutions.

Compounding your gains is a powerful tool.

In the end, it is your choice, but I wanted to display the comparison so we could see the effect it has.

That’s all.

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