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Originally Posted by Stompy
Something doesn't make sense here... let's say this 25% return remains consistent over 10 years. Based off the initial $1655, I will have $15,413.
There's only 6 stocks in this portfolio with 10 shares each, so that means each stock, on average, would have to be $256 per share. After 20 years when it should be worth $143,548, then each share should be $2392 per share.
Um... yeah, something isn't quite right with that...
So yes... where and how is this compounding effect taking place?
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This assumes that none of the shares split for 20 years. Not likely.
What the book means is that each year the portfolio gains 11%. Your portfolio is probably saying that the total gain is 27.64%
Unless I misunderstand your question, which is possible...