The compound interest effect
The exponential compound interest effect in asset accumulation is one of the cornerstones of our investment process. Admittedly, this requires lengthy observation period.
«Compound interest is the eighth wonder
of the world. Those who understand it earn from
it, all others pay for it.»
Albert Einstein
As the above sample calculation shows, the price advances over this long period contribute just 24% to the overall performance of the MSCI Europe Price Return Index. The remaining 76%, was generated by the reinvested dividends. Therefore, the dividend is anything but pocket money and should be continuously reinvested in existing stock positions!
This concept is so important to us that we have anchored it in our company name:
The Compound Interest Investment Management AG.