Tom Nash
patreon
How to turn $10,000 to $1.46 million
🕑 Added 2023-07-04 13:51:20 +0000 UTCDear Patreons, today, we're going to talk about the concept of compound interest and how it can help you turn $10,000 into $100,000 using a legitimate investing strategy, mixed with patience and discipline.
First and foremost, I want to clarify that I will not be talking about options, day trading, crypto and penny stocks, this is gambling and I have no desire to engage in that, and hopefully if you are here you feel the same.
Sure, high risk equals high reward, but it comes with a price, which is a low chance of success. Roulette tables are a great examples. Most gamblers lose their pants and I like my pants, so I would like to keep them.
So, if you want to turn $10,000 into $100,000 without jeopardizing your pants, as well as your financial well being, keep on reading.
So, what exactly am I talking about? well, its called the compound interest.
It's a concept that involves investing an initial sum of money, let’s say $10,000, and earning a return on that investment over time by investing in a broad market index fund like the VOO that tracks the S&P500.
Historically, the S&P500 will give you an 8% return annually, and as the overall performance of the market goes up, so does your portfolio. In this case, an 8% return on a $10,000 investment would yield $800 every year.
So wait, how do we get from $10,800 to $100,000?
We will do it by maximizing the power of compound interest.
That means that instead of taking out our profits at the end of the year ($800 in this example), we continue reinvesting the earnings back into the portfolio every year.
Instead of cashing out that $800 at the end of the year, you keep it in the portfolio, allowing your money to work for you faster, since the invested amount keeps growing every year.
As time passes, the profits you gain start to accumulate, leading to a compounding effect.
This compounding effect is similar to a snowball rolling down a hill, gathering more snow and increasing in size and momentum as it keeps rolling down the hill.
To better understand the concept, let's look at a hypothetical scenario spanning 30 years. In the first year, with an initial investment of $10,000 and an 8% return, you would earn $800 in profits.
At the end of the year, your balance would be $10,800.
In the second year, your profit will be based based on the new balance, resulting in $860 in profits for year 2.
Consequently, your balance at the end of year 2 would be $11,660. This pattern continues, with your balance increasing each year due to the compounding effect.
As the years go by, the growth becomes exponential, and in year 30, your ending balance would be $100,626.
This means that by simply staying invested in the S&P500 and allowing time to work its magic, you can turn your initial $10,000 into a remarkable $100,000.
It's important to note that you can accelerate this process by regularly adding money to your portfolio.
If you start with $10,000 and contribute $1,000 each month, by year 30 your balance is going to be $1.46 million.
In the words of the great Captain Chuck, how do you eat an elephant? Piece by piece;)
This is the right way to do it. It ain’t easy or quick but it will work for you, if you trust it.
Tom
Comments
Generico Fakero
That’s the perfect way of putting it
Beka
I like my money to make money.
Generico Fakero
Very good comment
Generico Fakero
We are talking about a zero risk strategy. If you want more reward faster you start increasing the risk.
Alpha Trader
Awesome article- Compound Interest Is The 8th WONDER Of The World, Use It! There is an app called compound interest calculator and it has 2 modes growth and withdrawal. It will blow you mind on the effect of compounding when you play with different return and time frames. Also, if you are looking to retire, you can also check based on how much you need to withdraw as to when the money will run out of your portfolio.
Spikey Mikey
I did it with Tesla in two years. A better idea is to find the next Tesla. Shouldn’t take 30 years, should it Tom? I’ll be dead before the next 30 years is up.
Generico Fakero
🏆
Justin Shelby
Love this. I tried to inspire my coworkers to invest their money by using a compound interest calculator some didn’t get it, others started by opening up Roth IRAs.
Generico Fakero
My pleasure Gary
Gary McVay-Hoffman
I appreciate the straightforward honesty.
