When Compounding Turns Against Us

Previously, I wrote about how compounding is the 8th wonder of the world. When used wisely, it is the magic that helps me grow wealth quietly in the background, as long as I give it sufficient time, inject a big enough capital, and manage a sufficiently decent yield. However what people often ignore, forget or dismiss, is how compounding does not discriminate. It is just a force, and it can just as easily work against one, as it can work in one's favor. In my own journey, I have seen both sides of compounding. On the positive side, compounding has helped my dividend portfolio grow. Every reinvested payout plants a seed that continues to bear fruit. But on the negative side, I have also experienced how a property with negative cashflow quietly chips away at my finances. Month after month, it drains resources that could have been building my future. People often say mortgage debt is “good debt”, but I have come to realize that if it does not p...