Thought of sharing this great article that I came across on the importance of value investing illustrating compounded growth and its long term impacts. Simple maths show how $1000 today could be worth $117,000 in 50 years if kept invested at a compounded rate of 10% (of course one needs to account for inflation and understand the present value of that money). But this is the crux of value investing. Pick up the right stock, back it for a long time, and see your value grow.
Diamond Hill Large Cap Fund is a $7B investment fund that showcases the power of compounded growth. Operated by Chuck Beth and Austin Hawley, the fund operates based on a simple philosophy – Buying quality companies at a discount to intrinsic value and holding them provides better returns over a long time as prices rise toward that fair-value estimate.
Do read these articles at your leisure. But remember why compounding is important.