Compounding is for the Mathematically Illiterate
You’ve been calculating percentages all wrong! 😃
Why doesn’t a 50% gain followed by a 50% loss get you back to your starting point? Because the standard way we define percentage increases is needlessly complicated. This post introduces the “true increase”, a new definition based on exponentials that makes growth calculations intuitive: percentages simply add up. A 10% gain and a 20% gain is exactly a 30% gain.
You will see how this change of perspective makes compounding obsolete and simplifies everything from interest rates to the “rule of 70”.