What 7% Compounded Growth Actually Looks Like

There is a graph that often gets posted around the internet that shows how your money compounds at a 7% rate of return. One of the things that often gets pointed out is that it takes less time to go from $600k to $1 million than it takes to go from zero to $100k due to the effects of compounding (the original post is at Four Pillar Freedom). While that is true mathematically, that isn’t true in practice.

Narrow your FI Window: Have we been thinking about investing completely wrong?

TLDR: We should optimize FIRE accumulation investment portfolios for withdrawal rates and volatility, not maximizing long-term compounded growth. This means a 100% equity portfolio is not the optimal asset allocation to achieve FI. We should get to the portfolio asset allocation we want during the withdrawal phase (retirement) much sooner than conventional wisdom states, perhaps from day 1.