How money compounds

Assuming that you can make a steady return of 2, 3 or 4 % a month this document will show you how much this actually makes you over a year two years and five years. The 2ways2wealth trading system and in particular the Blue Portfolio creates lots of small trades that allow the portfolio to grow without a large potential for loss. The return of 2% to 4% a month are achievable, so what does that all mean and how would it affect your account if you were involved. Compounding tables This table shows the returns of 2% a month on a 5,000, 10,000 and 20,000 pound account.

The return grows to just over 24% per year when we add the 2% onto each month and compound the results. These next tables show the increase of the monthly return by just 1%, this series of tables are looking at 3% per month and the impact that has on an account, you can see the staggering effect it has on the projected return.

These returns increase to 38% per year when compounded each month. The next series of tables looks at an increase of another 1 % per month, so the total monthly return added to each figure is now projected up to 4% each month which is very close to 1% per week.

The returns have grown up to 53% per year in this projection. These are interesting studies, as it does start to show the impact of high returns. This document is just a reference document that can highlight how a high return will grow exponentially and deliver an opportunity for people to create real returns Compounding over ten years The next set of tables displays the returns over ten years and the difference between 2, 3 and 4%. This first table is a 2% return which compounds over 24% in the year and then that is projected over ten years and you can see the amazing 1065% return.

This next table shows 3% compounded over twelve months which creates a 38% return.

This table shows a 38% return over 10 years, which compounds to a staggering 3,456% return. The last table is what occurs when the return is around 1% a week or 4% a month. This over a year creates a compounded 53% return. Now look at this over ten years. Compounding these kind of returns are of course just calculation on a spread sheet and no returns would provide a steady amount each year. This is of course just laid out so you can see why people do chase larger returns

The percentage return is over 10,075%, this is amazing and is of course is only an exercise but it is very interesting. How could you create these types of returns then? Well the simplest way is to find a trading system that will create 5 trades a day, were by the end of the week there are 25 trades and each trade risks 0.5% of the portfolio, if you make 13 winners and 12 losers you have made 0.5% a week or 2 % a month. Take this one step further and all we have to do then is to trade 10 trades a day which equals 50 trades a week and if we create 24 losers and 26 winners, we have increased the return to 1% a week or 4% a month. It is not hard. It is just a long process to find these systems and once they have been identified we automate them, using algorithms to manage the trades twenty four hours a day. One of our next articles will cover algorithmic trading in detail.