Investors‟ decisions – both conscious and subconscious – have an important bearing on
their long-term wealth. Through simple illustrations, this month‟s Strategy Talk looks at the
Power of Compounding and the benefits of reinvestment. Our regular health update focuses
on how to maintain healthy brain functioning with some helpful information and tips.
The Power of Compounding

Compounding isn‟t a new concept – many of us will remember studying it back in our school
days. Legendary scientist Albert Einstein famously called it „the most powerful force in the
universe‟, while American business magnate John D Rockefeller suggested compounding is
the „eighth wonder of the world‟. These might sound like bold claims, but the power of
compounding on an investment portfolio should certainly not be underestimated.
What is compounding?

In simple terms, compounding is the process whereby returns made on an investment are
reinvested in order to generate subsequent returns of their own.
The concept of compounding is best illustrated using an example. Twins Annie and Vanessa
both allocated $10,000 to the same interest-bearing investment on their 25th birthday. For
simplicity, let‟s assume the investment pays interest of 5% per year.
Annie reinvests all of her interest every year, while Vanessa banks the $500 each year and
spends it on everyday living expenses. Let‟s see how their investments had fared by their
45th birthdays.

Figure 1: Effect of compounding over 20 years

5% compound
5% interest ($)
interest ($)
value ($)
value ($)
Total value
Source: CFSGAM. Figures used for illustrative purposes only.
Arrow Wealth Management 5/651 Victoria Street Abbotsford VIC 3067 Ph (03) 8696 4100

Vanessa earned $500 interest each and every year for the 20 year period – a total of
$10,000. Of course she still had her original $10,000 investment as well. Annie, on the other
hand, saw her investment grow to more than $26,000 by reinvesting her interest. The
additional $6,000 she earned over and above Vanessa highlights the power of
compounding. You can see from the table that Annie‟s investment is now earning her $1,263
per year, while Vanessa‟s investment is stil earning her only $500. This differential would
continue to grow over time if the sisters remained invested.
Figure 2: The effect of reinvesting interest
Annie's investment

Vanessa's investment

Source: CFSGAM. Figures used for illustrative purposes only. Arrow Wealth Management 5/651 Victoria Street Abbotsford VIC 3067 Ph (03) 8696 4100

Make compounding work even harder for you
The power of compounding can be magnified if you make small regular contributions to your
investment. Let‟s look at another example to highlight the concept.
Brothers Jim, Dan and Tom all decided to invest $10,000 in the same managed fund for 10
years. Over that time the fund returned an average of 8% pa.
Happy with his original investment decision, Jim did not make any additional contributions.
Dan, the wiser brother, understood the effects of compounding and made additional regular
savings of $100 per month. Tom – the wisest of them all – worked out he could afford to
save an extra $200 per month and made sure he always contributed that amount to his
investment. The difference in their investment returns over 10 years is startling:
Figure 3: Effect of compounding with regular contributions over 10 years

Annual Value after 10
Source: CFSGAM. Figures used for illustrative purposes only. Source: CFSGAM. Figures used for illustrative purposes only. Of course the example is a stylised one. It ignores potential fluctuations in investment returns over the period, which would affect the three outcomes in reality. Arrow Wealth Management 5/651 Victoria Street Abbotsford VIC 3067 Ph (03) 8696 4100

These examples highlight how compounding and contributing regularly to an investment can
have a major influence on investment performance. The long-term performance impact of
compounding can be significant and must not be overlooked by investors. Perhaps Einstein
and Rockefeller were right, after all.
Speak to your financial adviser if you have any questions about compounding.


A Healthy Brain

Busy lifestyles, poor sleep quality, nutritional deficiencies and even genetics have
been pointed to as some of the potential causes of stress and low mood. Regardless
of the cause, there are often times in our lives where we need some extra support.

Our brains are amazing machines. By producing and balancing levels of the
neurotransmitters – or brain chemicals – serotonin and dopamine, our brains keep our
moods stable and our outlooks positive.
Many nutrients help to make these neurotransmitters, but three significant ones for mood are
SAMe, folate or B9 and vitamin B12.

S-adenosylmethionine (SAMe)
S-adenosylmethionine or ademetionine (SAMe) is a naturally occurring substance in the
body which helps maintain healthy mood.1 It has many roles, but one of the most important
is in the production of serotonin, dopamine and noradrenaline.1-3 These neurotransmitters
are responsible for our feelings of happiness, wellbeing, attention and reward. Keeping these
neurotransmitters in check is essential for our emotional welfare.
In numerous studies, patients with low mood were found to have lower than normal levels of
SAMe. In fact, supplementation with SAMe led to improved levels of serotonin and dopamine
and had beneficial effects on maintaining normal mood.3-6
SAMe also supports a healthy liver and assists in the production of glutathione,1,3,7 a potent
antioxidant. It has been shown to help with some of the symptoms of fibromyalgia including
pain, fatigue and, of course, mood swings.8,9 It has been shown to assist in reducing
inflammation associated with arthritis and help improve joint mobility.1,3,10

Folate and vitamin B12
Folate (vitamin B9) and cobalamin (vitamin B12) are essential for the normal development
and function of the central nervous system. They support the effectiveness of SAMe and are
required for its production and transport. Folate, vitamin B12 and SAMe show clinical
evidence in relation to supporting mood and brain function.11
Other activities of vitamins B12 and folic acid are to help maintain healthy memory, healthy
blood (including red blood cell production) and help support individuals who have B12 and
folate deficiency. B12 is especially important for the elderly and those on a vegetarian diet as
they are at a higher risk of B12 deficiency.
It‟s important to consider the form of nutrients so that you receive the most benefit from your
supplementation. Folinic acid is the active form of folate, and is more efficiently metabolised
and utilised.
Arrow Wealth Management 5/651 Victoria Street Abbotsford VIC 3067 Ph (03) 8696 4100

SAMe together with activated B9 and B12 may be just what you need to help maintain your healthy mood. It is the combination of these nutrients which renders it more effective than if they stood alone. Also effective in mood support is the use of herbal medicines such as Crocus sativus (saffron), Hypericum perforatum (St John‟s wort), Albizia julibrissin (mimosa) and Rhodiola rosea (rhodiola).
Saffron (Crocus sativus)
Saffron has been used in traditional Persian medicine for supporting healthy mood balance
and has emerged as a leading herb in improving symptoms of anxiety. Clinical trials show
30mg of saffron extract daily provided positive effects on mood and anxiety symptoms.12-15 A
recent statistical review of five clinical trials also revealed saffron‟s benefits on mood.16

Rhodiola (Rhodiola rosea
Rhodiola has traditionally been used in European, Asian and Russian medicine to support
healthy mood balance. Modernly, it has been shown to to improve mental performance and
cognitive processes and reduce stress-related fatigue.17,18

Mimosa (Albizia julibrissin
Mimosa is known in traditional Chinese medicine (TCM) as the "happiness herb" and is used
by TCM practitioners to calm the spirit, support healthy mood and memory, and reduce
irritability, sleeplessness and stress. The happiness herb focuses the mind and makes
people happy without care. Long-term consumption will lighten the body, brighten the eyes
and allow people to achieve their desires.19

St John's wort (Hypericum perforatum
St John‟s wort is one of the most scientifically validated herbal medicines for anxiety and
mood support.1,13,20,21 Its excellent safety profile and evidence for efficacy solidify its value in
the relief of anxiety symptoms.
Symptoms of low mood
If you have experienced the following signs or symptoms for two weeks or more, talk to your
healthcare practitioner about which nutritional and lifestyle therapies may help.
 Lowered self-esteem
 Change in sleep patterns (insomnia or broken sleep)
 Changes in appetite or weight
 Less able to control emotions such as pessimism, anger, guilt, irritability and anxiety
 Reduced capacity to experience pleasure
 Reduced pain tolerance
 Changed sex drive (reduced or absent)
 Poor concentration and memory
 Reduced motivation / things seem meaningless
 Lowered exercise levels
1. Braun L, Cohen M. Herbs and natural supplements: an evidence-based guide, 3rd ed. Sydney: Churchill
Livingstone Elsevier, 2010. 2. Ravindra AV, Lam RW, Filteau MJ, et al. Canadian network for mood and anxiety treatments (CANMAT). Clinical guidelines for the management of major depressive disorders in adults. V. complementary and alternative medicine treatments. J Affect Disord 2009;117(Suppl 1):S54-64. 3. Bottiglieri T. S-Adenosyl-L-methionine (SAMe): from the bench to the bedside--molecular basis of a pleiotrophic molecule. Am J Clin Nutr 2002;76(5):1151S-1157S. Arrow Wealth Management 5/651 Victoria Street Abbotsford VIC 3067 Ph (03) 8696 4100

4. Papakostas GI, Mischoulon D, Shyu I, et al. S-adenosyl methionine (SAMe) augmentation of serotonin reuptake inhibitors for antidepressant nonresponders with major depressive disorder: a double-blind, randomized clinical trial. Am J Psychiatry 2010;167(8):942-948. 5. Williams AL, Girard C, Jui D, et al. S-adenosylmethionine (SAMe) as treatment for depression: a systematic review. Clin Invest Med 2005;28(3):132-139. 6. Papakostas GI. Evidence for S-adenosyl-L-methionine (SAM-e) for the treatment of major depressive disorder. J Clin Psychiatry 2009;70 Suppl 5:18-22. 7. Leiber CS. S-Adenosyl-l-methionine: its role in the treatment of liver disorder. Am J Clin Nutr 8. Sarac AJ, Gur A. Complementary and alternative medicine therapies in fibromyalgia. Curr Pharm Des 2006;12(1):47-57. 9. Jacobsen S, Danneskiold-Samsoe B, Andersen RB. Oral S-adenosylmethionine in primary fibromyalgia. Double-blind clinical evaluation. Scand J Rheumatol 1991;20(4):294-302. 10. Kim J, Lee EY, Koh EM, et al. Comparative clinical trial of S-adenosylmethionine versus nabumetone for the treatment of knee osteoarthritis: an 8-week, multicenter, randomized, double-blind, double-dummy, Phase IV study in Korean patients. Clin Ther 2009;31(12):2860-2872. 11. Bottiglieri T. Folate, vitamin B12, and S-adenosylmethionine. Psychiatr Clin North Am 2013;36(1):1-13. 12. Basti AA, Moshiri E, Noorbala AA, et al. Comparison of petal of Crocus sativus L. and fluoxetine in the treatment of depressed outpatients: a pilot double-blind randomized trial. Prog Neuro-Psychopharmacol Biol Psychiatry 2007;31:439-442. 13. Sarris J, Panossian A, Schweitzer I, et al. Herbal medicine for depression, anxiety and insomnia: a review of psychopharmacology and clinical evidence. Eur Neuropsychopharm 2011;21(12):841-860. 14. Akhondzadeh S, Tahmacebi-Pour N, Noorbala AA, et al. Crocus sativus L. in the treatment of mild to moderate depression: a double-blind, randomized and placebo- controlled trial. Phytother Res 2005;19(2):148-151. 15. Akhondzadeh S, Fallah-Pour H, Afkham K, et al. Comparison of Crocus sativus L. and imipramine in the treatment of mild to moderate depression: a pilot double-blind randomized trial. BMC Complement Altern Med 2004;4(12). 16. Hausenblas HA, Saha D, Dubyak PJ, et al. Saffron (Crocus sativus L.) and major depressive disorder: a meta-analysis of randomized clinical trials. J Integr Med 2013;11(6):377-383. 17. Panossian A, Wikman G, Sarris J. Rosenroot (Rhodiola rosea): traditional use, chemical composition, pharmacology and clinical efficacy. Phytomedicine 2010;17(7):481-493. 18. Hung SK, Perry R, Ernst E. The effectiveness and efficacy of Rhodiola rosea L.: a systematic review of randomised clinical trials. Phytomedicine 2011;18(4):235-244. 19. Bensky D, Clavey S, Stoger E. Chinese herbal medicine materia medica, 3rd ed. Seattle: Eastland Press, 20. Luberto CM, White C, Sears RW, et al. Integrative medicine for treating depression: an update on the latest evidence. Curr Psychiatry Rep 2013;15(9):391, doi: 10.1007/s11920-013-0391-2. 21. Pakseresht S, Boustani H, Azemi ME, et al. Evaluation of pharmaceutical products of St. John's wort efficacy added on tricyclic antidepressants in treating major depressive disorder: a double blind randomized control trial. Junishapur J Nat Pharm Prod 2012;7(3):106-110 For more information contact Christine Gozlan at Essential Health 10/246 Dorset Rd, Boronia VIC 3155, ph 9762 6093 Arrow Wealth Management
Suite 5 Skipping Girl Place, 651 Victoria Street, Abbotsford 3067
P: +61 3 8696 4100 E: [email protected] W: www.arrowwealth.com.au

Arrow Wealth Management 5/651 Victoria Street Abbotsford VIC 3067 Ph (03) 8696 4100 Any general advice in this newsletter does not take account of your personal objectives, financial situation and needs, and because of that, you should, before acting on the advice, consider the appropriateness of the advice, having regard to your objectives, financial situation and needs. Also, you should read the relevant Product Disclosure Statement before acquiring any product mentioned in this newsletter. This newsletter is confidential and is for the intended recipient only. If you are not the intended recipient do not use or rely on this information please contact us and delete all copies of this newsletter. If you do not wish to receive any more newsletters from us please let us know by calling our office on (03) 8696 4100. Arrow Wealth Management 5/651 Victoria Street Abbotsford VIC 3067 Ph (03) 8696 4100

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A Patient This guide aims to outline why antidepressants(or other treatments) may be recommended by yourdoctor and also provides information about how theyshould be used. What is depression?Feeling unhappy and depressed is part of the range of normal andunderstandable human emotions, often as a result of difficultcircumstances and happenings in our lives. Everyone knows how it feelsto feel sad and low. Some people find that their low mood becomes sosevere that it affects their usual ability to function, for example look afterthemselves, in their home or at work. Normally pleasurable activities feeldifficult and are not enjoyed. Sleep may be disturbed and appetite oftenreduced. Similarly the ability to concentrate on simple tasks like readingor watching the television can be difficult. Everyday thoughts are oftenbleak and thoughts of hopelessness and even suicide may be present.If such symptoms last for over a couple of weeks it is quite likely thatthe person is suffering from depression.