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The fascinating part for me has always been the power of compounding : 1.032 ^ 300 = 12703, while 1.030 ^ 300 = 7098 ! i.e., a difference of 0.2% per annum makes a 5600-times difference in final wealth.

Related : in the finance industry, there's a term called basis points (written bps, pronounced "bips"). 1 bps = 1/100th of a percentage. So that 0.20% is actually 20 bps, a royal magnitude in this new perspective of compounding :-)



12703 / 7098 = 1.78965x.

So a 6.7% increase in intrest rate (3.2 vs 3.0) makes a 79% difference in return after 300 years.




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