Page 3 - Wealth-Adviser-Issue-119 (FWP)

ISSUE 119
SEPTEMBER 2025

erty, especially if you have many years until retirement. Conclusion: Compounding—the True Engine of
As AMP and Findex highlight, higher returns—even if Wealth
volatile—are the engine behind outsized compounding Of all the habits, tricks, and strategies in the investment
over time. universe, none rivals the long-term power of compound-
• Increase Contributions as You Can: Any windfall, pay ing. Like a snowball rolling downhill, it grows quietly and
rise, or bonus is an opportunity to turbocharge your slowly at first, then with unstoppable momentum. The
future with compounding. Even a single larger, early greatest wealth-builders—whether individuals, funds, or
contribution multiplies wealth after years of returns on nations—have succeeded by harnessing this simple, patient,
top of returns. repeatable process.
• Diversify and Monitor Costs: Don’t bet everything on a For every Australian, the message is clear: Time and
single asset or sector. Balance shares, property, cash, and discipline—not luck or market wizardry—are the foundation
bonds to match your risk profile. Favour vehicles with of a secure financial future. Start early, think long, invest
low fees—compounding works best when less is lost to steadily in growth, and let compounding do what it does
costs. best. In the end, the true magic multiplier is not found in
• Stay the Course and Tune Out the Noise: Market declines complexity, but in the everyday choice to let your money,
are uncomfortable, but panic-selling defeats compound- step by step, work for you—year after year.
ing. Understand that volatility is a feature, not a bug,
with the patient investor typically emerging ahead. As Dr
Shane Oliver puts it, “Invest a bit of time in understand- References
ing that short term volatility is a normal part of invest- • Oliver’s insights – Compound interest and returns are an investor’s best
ment markets and partly explains why growth assets friend, AMP, 2025
have a higher return in the first place.” • Boost Savings with Compound Interest, AMP, 2025
• Learn and Review Regularly: Make use of adviser guid- • Harnessing compounding interest to grow your superannuation and
ance, review your super investment options, and regu- investments, Findex, 2024
larly check in on your goals. Avoid the urge to chase “get • Compound Interest is an investor’s best friend, Green Taylor Partners,
rich quick” ideas—slow and steady nearly always wins 2025
the race. • Investing in 2025: Compound Your Way to Happiness, BlackRock, 2025
The most important decision is often to “do nothing”—
letting compounding work without unnecessary interfer-
ence.

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