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The Wealth Gap: How Compounding and Starting Capital Interact

The Wealth Building Curriculum • Beginner Investing • 7 min

Here's a purely mathematical fact, not a matter of investment skill or luck: if two investors both earn the exact same 8% annual return, one starting with $10,000 and the other starting with $1,000,000, the dollar gap between their two portfolios grows substantially larger over time, even though their percentage returns are perfectly identical. The investor starting with $10,000 earns $800 in year one; the investor…

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