/biz/ - Business & Finance

>>57851554
its even worse than that.

The tranche is a variable point per investment goal. but for definitions sake.
Its the point where the pay period buys you one full investment token.

for ease lets assume divvies. but you could get this with options. or bond coupons or whatever. that doesn't matter.

lets say your shits priced at $1 $10 or $100
with a 5% return.

The tranche number would be the point where each pay period you can buy 1 full share of the token.

quick way to do this is divide share price by the percent return 10 / 0.05 or 200 shares
meaning each time you get paid you can buy at least 1 full share.
this is where compounding starts.
100 shares is the point where 5% equals 5% return.
but if you're doing fractional percent returns without being able to actually compound. you're doing strictly worse than a savings account.
So imo this point is your minimum viable investment target. to be actually called investment. 100 shares is the point where you're doing a little better than a savings account.
these are the 3 points of power where you get on top of your investments. you should minimize the time between them.
you can skip most of that shitty grind at the beginning by just simply stacking cash. your brokerage account pays you interest on your cash. but if you're doing less then a 100 shares you're just floating the interest for someone of moderate size.
thats okay for the extreme short term. lets say you're depositing $100 every month. on your way to 200 shares.
another way of thinking about it you've heard people talk opportunity cost. by buying 1 $100 share you're setting back the start date of the compounding period by 200 periods. so you're locked in for that amount of time. but compare the $1 you buy 100 shares every pay period. and every 2 you get 1 tranch. and by period 4. you have 410 shares because the compounding clock has already started. tfully vested is the point where each pay period you can buy a tranche. which would be ,4000 shares.