Row 31863

Row ID: 31863 | Dataset Entry | Axioma AXP Content Repository

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if you are talking annualize rates, they definitely do compound.

$100>110>121... That is compounded growth. growth on top of total principal every year. not just on initial principal. doesn't matter if it's $$ in a savings account or a stock price.

OP's problem is they're comparing a growth rate to a total return. In his example Apple is actually compounding at 9.5% annually to end up w/ a 20% total return. Similarly, since he is using 10% annualized growth for the savings account. the total return is actually 21%.

This is why OP is confused and getting different numbers.

Talking about stock growth in terms of an annualized rate of return is 100% compounding. This is why if you look at growth of a stock over time using an average annualized growth rate it grows exponentially. If it weren't compounding, it would be a linear chart.

FieldValue
text if you are talking annualize rates, they definitely do compound. $100>110>121... That is compounded growth. growth on top of total principal every year. not just on initial principal. doesn't matter if it's $$ in a savings account or a stock price. OP's problem is they're comparing a growth rate to a total return. In his example Apple is actually compounding at 9.5% annually to end up w/ a 20% total return. Similarly, since he is using 10% annualized growth for the savings account. the tota…
label r/investing
dataType comment
communityName r/investing
datetime 2024-05-21
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Raw Record

{
  "text": "if you are talking annualize rates, they definitely do compound.\n\n$100>110>121...  That is compounded growth. growth on top of total principal every year. not just on initial principal. doesn't matter if it's $$ in a savings account or a stock price.\n\nOP's problem is they're comparing a growth rate to a total return.  In his example Apple is actually compounding at 9.5% annually to end up w/ a 20% total return.  Similarly, since he is using 10% annualized growth for the savings account. the total return is actually 21%.\n\nThis is why OP is confused and getting different numbers.\n\nTalking about stock growth in terms of an annualized rate of return is 100% compounding.  This is why if you look at growth of a stock over time using an average annualized growth rate it grows exponentially. If it weren't compounding, it would be a linear chart.",
  "label": "r/investing",
  "dataType": "comment",
  "communityName": "r/investing",
  "datetime": "2024-05-21",
  "username_encoded": "Z0FBQUFBQm5Lak1HZ2VacDJ6dVdWbnQ4TmtLV2hSSEE0aXRiMTEtRXdDYkZuRkIyWC1RSUthNlN0d2ljcHhPVG9LbnlCRlAzc25EV3gzdUxzY1dDQnpMX0p0d25ObnBCN0l2bk8yVVVBX0Q0czdVZmgyWTU0MGM9",
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}
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