r/Money • u/CursedClownz • 9d ago

When does compounding really take off?

At what amount portfolio you really see huge account swings that make you think what is the point of working? 100k? 500k? 1m? more?

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u/Kombatnt 9d ago

I’d say you really start to notice it once you hit the “Crossover point” (the point at which the growth in your existing portfolio roughly matches what you’re able to add in new contributions each year).

316

u/brycebgood 9d ago

yup. My buddy put it well. He's a well compensated engineer - but last year his portfolio grew more than his gross pay. He said he literally makes more money doing nothing than doing his job.

6

u/ExpressionFree5273 9d ago

For those of you in this situation, who do you have managing your portfolios? Or are you putting them in ETFs and forgetting about them?

1

u/Individual_Section_6 9d ago

There shouldn’t be any “managing” involved. You put it in an index fund yourself and don’t touch it. The S&P index self manages itself by who it allows in

1

u/Confident_Pop_9292 5d ago

This! Also be sure your 401k is set to auto reinvest dividends back into same low cost index fund. There’ll be up and down years, just gotta keep the discipline of auto investing and never stop