Stop Chasing Returns. Start Building Wealth.

In 1976, The Wall Street Journal published an opinion column that ascribed an astounding revelation to one of the greatest minds in history. Albert Einstein was asked what he surmised to be man's greatest invention.

He didn't answer with the wheel or electricity. He replied: "Compound interest."

Whether he actually said that is up for debate, but the truth behind the quote is undeniable.

It sounds simple. It is simple. But most investors still get it wrong.

Compounding, Part 1: Interest on your interest

Compound interest is money's version of a perpetual motion machine. You earn interest not just on your principal, but on your interest. And then interest on that. Over and over.

It's how a modest investment return can snowball a portfolio into something impressive—if you let it.

But here's where many investors trip: they become obsessed with chasing higher returns.

Beating the market feels like winning. But building wealth isn't about winning annual benchmark comparisons. Given your risk tolerance and emotional fortitude, it's about growing your portfolio to its maximum potential.

Ask yourself: Would you rather beat the market in some years and end up with $1 million…or underperform in many years but wind up with $1.2 million?

You can't spend bragging rights in retirement.

Compounding, Part 2: Time—the hidden superpower

The longer your money stays invested, the harder compounding works as your silent partner in wealth creation.

Warren Buffett is unquestionably a skilled investor, but his superpower is time. He has been a good investor, a patient investor, for eight decades.

The time component of compounding is the rocket fuel that took Buffett's wealth accumulation into the stratosphere. It's why his first billion came after age 55, and 97% of his wealth came after his 65^th birthday.

Charlie Munger put it bluntly: "The first rule of compounding is to never interrupt it unnecessarily." And how do investors usually interrupt it? By chasing higher returns. That's like taking a chainsaw to a bonsai tree because it's growing too slow.

Peter Lynch ran Fidelity's Magellan Fund from 1977 to 1990, posting an incredible 29.2% average annual return—nearly double the S&P 500. You'd think investors would've made a fortune, right?

Nope. During that remarkable run under Lynch, the average investor in the fund reportedly lost money. Why? They bought in late after big run-ups, panic-sold after downturns, and sat in cash looking for a different "market winner" when they should have stayed the course.

They turned a compounding machine into a vending machine, and it ate their dollar bills. (The Magellan story is not an isolated tale. See here for more on the prevalence of this investor performance gap.)

Compounding, Part 3: New money—the force multiplier

The most underrated lever in wealth-building isn't returns or timing. It's you. Specifically, your monthly contributions.

Let's say you start with $1,000 and earn 10% annually. After five years, you'll have a little over $1,600. Not bad.

But now imagine you also invest $100 every month. After those five years, your portfolio swells to nearly $10,000. That's a 500% leap — not from better performance, but from steady, boring, powerful consistency.

In the first 10-15 years of your wealth-building journey, how much you invest matters more than how well you invest.

But what if you could double your return? Here's how the math shakes out:

• Save 20% of your salary and earn 5% annually, and your portfolio balance surpasses your salary in about 4.5 years.
• Double your return to 10%? You get there just five months faster.

The early innings aren't won by clever trades or market timing. They're won by habit and hustle—those monthly contributions. (Later, once your portfolio has real weight behind it, returns start pulling more of the load.)

The wealth accumulation trifecta

Intuitively, pursuing the highest returns feels like the best way to maximize wealth. However, once investors consider the importance of both time and monthly contributions, they realize that maximizing annual returns and maximizing wealth are two different concepts.

To build wealth, you don't need to swing for the fences. You need to stack three simple habits:

1. Earn reasonable, repeatable returns
2. Let time do its quiet work, uninterrupted
3. Keep adding fresh cash every month

That's the trifecta. No gimmicks. No get-rich-quick trades. Just boring, beautiful compounding.

Don't let the early years of compounding fool you. They feel slow, almost like nothing's happening. But that's how compounding starts. Quiet. Invisible. Then…exponential.

Stay patient. Stick to your plan. Trust that compounding portfolio growth does work.

Review your investment strategy this week with these three principles in mind. As the current markets bounce around and headlines scream, lean into discipline, not drama.

While others chase performance like caffeinated cats in a laser pointer factory, you'll quietly build unstoppable momentum.

You don't need to be the first across the wealth accumulation finish line, but by embracing all three components of compounding, you can help ensure that you do indeed cross it.

As always, invest often and wisely. Thank you for reading.

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The content is for informational purposes only. It is not intended to be nor should it be construed as legal, tax, investment, financial, or other advice. It is merely my own random thoughts.

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