Math time! Let’s say you donate $1000, and that $1000 is used to continuously provide Vitamin A supplements for children in Kenya.
On average, in the past 30 years, the market grew 10% per year.
So after 1 year, that $1000 grows to $1100.
Part of the profits are taken to buy the Vitamin A supplements, and the other part stays together with the initial donation to continue multiplying and producing more supplements.
For example, we buy supplements for $50 and reinvest $50.
So, we start year 2 with $1050, and after another year, that grows to $1155.
Now, we can distribute even more supplements!
Every year, more and more.
This is called compounding and it’s one of the most powerful traits of investing.
If we repeat this process over and over again, during an average lifetime (77 years), you provide ~33x more meals than with your traditional donation.