i dont have any investment in funds so i’m not sure how it works but I keep reading that an index like sp500 gives about 6-8% return yearly, and compounding will grow your capital even more.
Does this mean that at the end of each year you will have the balance adjusted automatically according to that year’s performance? I mean, if I enter at let say 3500pts and hold for 5 years, during which is had extremes highs, but then on the 5th year it goes back down to 3000pts and I exit, would I still have made profit or will it be like a perfect break even since 3000-3000 = 0 increase? cause if the balance will breakeven wouldn’t it means that there’s no compounding at all?
thnks in advance