How much growth can I expect with Index Investing?

Compounding: earning money on money already earned

Let’s see how a euro invested, grows toward the end of our long-run, say 30 years from now.

  • The average long term return on investment in stock indices is about 8%. The growth factor would be 1.0800. This is called the Compound Annual Growth Rate (CAGR)
  • We will pay some fees for the index, average of around 0.15% per year. This reduces the CAGR to 1.0800 / 1.0015 = 1.0784
  • Also, in the Netherlands, we pay 1.20% on capital per year, which leaves me with a CAGR of 1.0784 / 1.0120 = 1.0656

15 years from now, that one euro invested today should turn out to be:

1.0656^15 = 2.6 euros

30 years from now, that one euro invested today should turn out to be:

1.0656 ^ 30 = 6.7 euros

year value
0 1
1 1.0656
2 1.1355
3 1.2100
4 1.2893
5 1.3739
6 1.4640
7 1.5601
8 1.6624
9 1.7715
10 1.8877
11 2.0115
12 2.1434
13 2.2840
14 2.4338
15 2.5935
16 2.7636
17 2.9449
18 3.1381
19 3.3439
20 3.5632
21 3.7970
22 4.0460
23 4.3114
24 4.5943
25 4.8956
26 5.2167
27 5.5589
28 5.9236
29 6.3121
30 6.7262