I continually see examples encouraging young people to start investing for retirement with graphic examples using compounding interest to show that starting early pays off big. I've always bought into this idea.
However, today I started thinking about it. Very few of us invest our retirement nest egg in an interest bearing account and expect interest to grow our money over our working lives. Anyone sensible enough to realize that interest rates are close to negligible recently would be crazy to rely on that strategy.
So my Question is this, in reality is investment in equities like the stock market even remotely resemble the type of growth one would expect if investing the same money in an account with compounding interest? Are all these prognosticators vastly underestimating how much savers need to be socking away by overstating what is realistic in terms of growth in investment markets?