The Power of Compounding
Imagine discovering a secret so powerful that it has been dubbed the “eighth wonder of the world.”
Thankfully, this wonder isn’t guarded by encrypted texts or mystics. We can all take advantage of the simple yet profound principle of compounding and it can start with investing in the Nasdaq-100 Index Fund (NASDX).
What is compounding?
Compounding is the process where the returns on your investments generate their own returns. Over time, this creates a snowball effect, possibly turning modest initial investments into substantial sums.
For example, consider an investment in the Nasdaq-100, an index known for its inclusion of leading tech giants and innovative companies. By reinvesting dividends and maintaining a long-term perspective, investors can potentially harness the compounding effect to grow their wealth.
Compounding in action: an example
Let’s break it down: if you invested $10,000 in the Nasdaq-100 Index Fund (NASDX) and it grew at an average annual rate of 18.21%*, your investment would double approximately every four years. After 20 years, that initial $10,000 could grow to nearly $283,847, thanks to the exponential nature of compounding.
Now, if you also added $100 per month to your investment, the total value after 20 years would be even more impressive. The additional contributions, combined with the compounding returns, would grow the investment to approximately $478,913.
Accelerate growth
The real magic happens when you consistently add to your investment. Regular contributions amplify the compounding effect, potentially accelerating growth and helping build a robust financial future. It’s about letting time work for you, turning patient investing into a powerful wealth-building strategy.
Understanding the power of compounding helps investors appreciate the importance of staying invested, even during market volatility. It’s a reminder that in the world of finance, patience and consistency can indeed unlock wonders, transforming diligent investors into financial stewards of the eighth wonder of the world.
Important Information
*This was the average rate of return for NASDX for the last ten years ending 6/30/24
Performance as of 6/30/2024: NASDX: YTD: 17.24% 1YR: 30.30% 3YR: 11.09% 5YR: 21.38% 10YR: 18.21% Nasdaq-100 Index: YTD: 17.47% 1YR: 30.77% 3YR: 11.51% 5YR: 21.74% 10YR: 18.91%
NASDX Expense Ratio: Gross: 0.66% Net: 0.52%
An investment in the Fund involves risk, including possible loss of principal. Fund information is not intended to represent future portfolio composition. Portfolio holdings are subject to change and should not be considered a recommendation to buy individual securities. Past performance does not guarantee future results.
The Fund invests in the largest non-financial companies that are traded on the Nasdaq Stock Market. They are currently concentrated in the technology sector which has been among the volatile sectors of the U.S. stock market. During a declining stock market, this fund would lose money. It would potentially lose more money than other large cap funds.
Nasdaq®, Nasdaq-100® and Nasdaq-100 Index® are trade or service marks of The Nasdaq Stock Market, Inc. which with its affiliates are the “Corporations”) and are licensed for use by the Fund. The Fund has not been passed on by the Corporations as to their legality or suitability. The Fund is not issued, endorsed, sold, or promoted by the Corporations. The Corporations make no warranties and bear no liability with respect to the Fund.
It is not possible for individuals to invest directly in an index. Performance figures for an index do not reflect deductions for sales charges, commissions, expenses or taxes.
Shelton Funds are distributed by RFS Partners, a member of FINRA and affiliate of Shelton Capital Management.
Investors should consider a fund’s investment objectives, risks, charges, and expenses carefully before investing. The prospectus contains this and other information about the fund. To obtain a prospectus, visit www.sheltonfunds.com or call (800) 955-9988. A prospectus should be read carefully before investing. Diversification does not assure a profit or protect against lost in a declining market.
INVESTMENTS ARE NOT FDIC INSURED OR BANK GUARANTEED AND MAY LOSE VALUE.