Join our community of smart investors

Why we always misunderstand compounding

Alex Newman explains the pitfalls to avoid when relying on slow returns
Why we always misunderstand compoundingPublished on April 6, 2023
  • Babies don’t grow like investments
  • It’s hard to accelerate the compounding effect
  • Lots of idea-generating content 

It’s an incredible sight to watch a newborn chub up. According to the World Health Organisation, the average baby’s weight jumps 62 per cent in the first 10 weeks of life and has doubled by week 20. By their 30th week the average tot weighs 7.9kg, having entered the world at 3.45kg.

That works out at an average daily growth rate of 0.4 per cent over the first 210 days. Although this doesn’t sound like much, any child who maintained this trajectory would weigh in at 63.6kg (10 stone) aged two and 274kg a year later. By then, all cooing over baby fat would likely have fallen silent.

This is subscriber only content
Start your trial to keep reading
PRINT AND DIGITAL

Get 12 weeks for £12
  • Essential access to the website and app
  • Magazine delivered every week
  • Investment ideas, tools and analysis
Already a subscriber? Sign in