How long???

Back in 2019, I did a live presentation for about 100 women in a cool coworking space in Zurich. 

It was my first time presenting to such a large crowd about this very topic.

And I spoke about why investing is probably the key to many of our later-in-life troubles… 

(well, I didn't use these words exactly, but that was the point of the presentation). 

When I had finished speaking, we moved on to the Q&A part. 

And you know how usually, after a presentation, there is barely anyone asking questions?

Well, not this time. 

Because I was literally bombarded with questions.

(actually, ever since that night, I somehow get tons of questions after each of my live presentations and webinars) 😉 

But here is the one question I remember from that night: 

"How can you be sure that the stock market will always go up?" 

And here is the answer to this one-million-dollar question, which I've addressed many times over the past years: 

"Technically, we can't. But actually, that doesn't really matter."

Uhhh?

I went on to explain that historically, the stock market has been going up on average for the last hundred years…

… but that's not the reason why we should invest. 

And that companies listed on the stock market generate value by developing new technologies and raising productivity levels… 

… but that's not the reason why we should invest either.

Here is what it's all about.

When we invest, we get a return on what we have invested.

And when we re-invest that return, then we get a return on the return of the previous period. 

It's called compounding interest. 

Here is a simple example: 

Let's say you invest €1,000 in a well-diversified portfolio of companies tomorrow. 

Over the coming year, several companies in that portfolio will pay you a dividend. 

These are new earnings for you. 

And the beauty of it is that it's truly "passive." 

Your portfolio can be set up to automatically re-invest these dividends as soon as you get them. 

Then in year two, you'll get a dividend on what you will have invested initially... 

... plus a tiny dividend on the dividend from year one.

Then in year three, you start getting a dividend on the dividend from year one... 

... and another dividend on the dividend from year 2. 

So when you invest for many years, you get dividends on dividends on dividends on dividends on dividends on dividends, etc.

And the first few years, your extra dividends are small, and it looks like peanuts. 

But as the years go by, they increase exponentially. 

So much so that as of 10 years, your portfolio starts growing really fast. 

And the longer you invest (think: decades), the more this exponential thing works in your favor. 

Big time. 

So that's why I invest. 

That's why I'm not just blindly "hoping" the stock market will always go up. 

Instead, my strategy is all about the compounding interest formula. 

Because this is set in stone. 

It's mathematical. 

And I have no interest in gambling with my hard-earned savings. 

(nor with what I've received from my dad as pre-inheritance over the years). 

And let me tell you this: 

It really works. 

Even when you start investing and then the stock market goes down on you for a year… or two… or three….

Because in this case, it's emotionally tough to stay the course and keep at it. 

But when you do that, when you pass all the crazy of the first couple of down cycles which will inevitably hit your portfolio… 

… then you start seeing the results.

Especially after 10 years (and sometimes a little earlier). 

That's why the best you can do is start investing as soon as possible.

So that you can reach "10 years" as soon as possible.

And so that you can invest for as many decades as possible in your lifetime.

One more thing on this topic: 

Whenever I explain this compounding interest strategy to someone... 

... they start mentally calculating how long they'll be able to invest until they retire. 

But here is the thing:

You won't have to sell your entire portfolio the day your retire.

It doesn't work like that. 

Instead, you should keep your portfolio invested, but you'll progressively withdraw from it each year. 

That's why the compounding formula could work for you way longer than until retirement age. 

… assuming you learn how to invest in the best way possible and implement ASAP. 😉 

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That’s all I had for you today!

➡️ Do you need help starting with investing? Let me know in a comment below.

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