RE: Embrace The Power of Compound Interest
I love that you're reinforcing the importance of compounding, but have to add that we shouldn't restrict the investment universe of good compounding wealth assets to those you listed. There are a ton more, and even these listed need to be in the context of risk adjustment.
for instance, you're spot on with long horizon thinking, but saying "The best way to achieve compounding returns in the stock market is to invest long-term in blue chip companies" isn't true. That's one way of investing in stocks, but a long horizon investor should probably be looking towards small value stocks for higher risk-adjusted returns.
Investing these days is more about factor exposure than selecting a single asset class, or even segment of an asset class, like blue chip stocks.
If the long term goal to is create a compounding dividend machine with stocks, I just think the established companies will do the job better since many of them have been increasing their dividends for many years. There are about 20 companies in the S&P that have increased their dividend for at least 50 consecutive years.
Small caps are definitely the place to be if you're looking for growth, but I honestly think the average person should at least have the core of their equities portfolio in dividend paying blue chips. Thanks for the comment and for reading!
My pleasure and thanks for writing...the overall message is very important. And yes, if you're goal is to get dividend income, then i agree that blue chips are the way to go. i just think the message of compounding ought to extend to all value compounding, not just income; e.g. earnings compounding instead of just the dividend distribution component.