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Eighth Wonder of the World Thumbnail

Eighth Wonder of the World

It’s pumpkin pie week.  

When it comes to pies, my favorite is a slice of pumpkin pie.  

When it comes to investing in common stocks, my favorite slice is the compounding of dividends. In my first book, The Coffeehouse Investor, How to Build Wealth, Ignore Wall Street and Get On With Your Life, using data from Morningstar, I calculated that from 1978 to 2007, a $10,000 investment in the S&P 500 Index would have grown to $386,140. Of that growth, 60% was attributable to the reinvestment of dividends. 

I’m not saying that compounding dividends will have the same impact as before, but by ignoring the daily commotion of companies, I’m going to make darned sure I capture the biggest slice over the next 40 years as I did the past 40. By then I will be 103, and that is what I am shooting for. 

To get there, I remind myself that compounding doesn’t just happen in the stock market; the success of our health and wealth is built around our adherence to compounding as well.

David Booth explains it best in his article, The Power of Compounding – in Health and Wealth. “With advances in medical science, many of us are living longer, healthier lives than ever before. This means it’s more important than ever to invest for the long term."

Grateful for Your Support

I can’t close this letter without expressing my gratitude for your readership, your support, and for sharing the Coffeehouse Investor message with investors around the country. With your help, we are changing lives, one investor at a time. 

From my family to yours, I wish you a Happy Thanksgiving.