Selling in a panic, or spending the growth, resets the clock.
Don’t interrupt compounding.
One life, two futures. You choose. The other keeps the rule.
Growth only compounds while it stays in. Every pause starts the clock again.
← Red LinesRed Line 8 of 48 The idea The numbers Where you see it Where it bends This game’s numbersHow strong the proof isBGood proof, with limits Where it comes from
Growth only compounds if it stays in. Spend it, or sell in a fright and sit out, and the next year starts again from where you were.
€10,000 at 7% a year, left alone for 30 years: about €76,000. Spend the €700 of growth every year instead and it is still €10,000 after 30 years, with €21,000 spent along the way.
For over a century, reinvested dividends made up most of what shares really earned. A fund marked “accumulating” reinvests them for you; “distributing” pays them out.
Interrupt it to fix a real mistake, never because of a mood. And growth is there to be spent one day: that is the point of it.
Why 7%: long-run share returns, Jeremy J. Siegel, Stocks for the Long Run (1994)Worked out on this page
Investors who move money in and out earn clearly less than the funds they hold, in decades of data, but the size of the gap depends on how it is measured.
- What Are Stock Investors’ Actual Historical Returns? Evidence from Dollar-Weighted Returns Ilia D. Dichev, American Economic Review 97(1), 386-401, 2007
- Mind the Gap 2026 Jeffrey Ptak, Morningstar, 2026
Checked 2 Nov 2026 · How we grade
- A Strong proof: Many good studies or long official data, from different teams or countries, point the same way.
- B Good proof, with limits: Solid studies agree on the direction, but the size varies, or the data covers few places or few kinds of people.
- C Mixed proof: Some good studies for, some against, or the evidence covers only part of the line.
- D Thin proof: Mostly one book’s argument, one survey or stories. It may be wise, but it has not been tested well.
- = True by the sums: It follows from arithmetic, so no study can overturn it. We still show what real data says.
Jeremy J. Siegel, The Future for Investors (2005). In our words, not quoted.
See it in numbers: Compounding (From Zero)
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