The importance of re-investing (compounding)

Trend Surfers - Trend Following Signal for cryptocurrency trader

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.

Trading Tools

Become a better trader!

Sign up to receive our free trading tools, Strategies and Market Analysis!

We don’t spam! Read our privacy policy for more info.

Trend Surfers Logo

Up your Trading Game!

Get Free Trading Tools, Strategies and Market Analysis!

We don’t spam! Read our privacy policy for more info.

Help us help someone you want to help!

Leave a Comment

Your email address will not be published. Required fields are marked *

en_USEnglish
Scroll to Top