Whether you're 15 or 45, follow this simple process and being a millionaire isn't too far away. COMPOUND INTEREST CALCULATOR:
HIGH PERFORMING INDEX FUNDS:
1. Fidelity ZERO Large Cap Index
2. Vanguard S&P 500 ETF
3. SPDR S&P 500 ETF Trust
4. iShares Core S&P 500 ETF
5. Schwab S&P 500 Index Fund
MINIMUM ANNUAL INVESTMENT AMOUNTS PER AGE BRACKET :
15-25= $1000 annually for 10 years
20-30= $1415 annually for 10 years
25-35= $2220 annually for 10 years
30-40= $3445 annually for 10 years
35-45= $5580 annually for 10 years
(ALL investment amounts are accounting for a 9% annual return with full withdrawal at the age of 80 years old)
Warren Buffet, Donald Trump and almost all legendary investors all utilise this principle in order to multiply their wealth exponentially. Compound interest is a phenomenon in which the interest (or the amount of money earned from an investment) is reinvested back into the principle (or the initial money that you invested at the beginning) that starts a process of compounding, which in this context means to magnify your money through the constant reinvestment of additional earnings. Which, in the long run, leads to results that are not only magnificent but also disproportional to your initial investment.
e.g.
-You have 100 dollars (the principal) + you invest it for a 10% annual return
= you earn $10 at the end of the year.
but instead of running off with that $10 and waisting it, you reinvest your $10 so that now you have $110 invested, and with your 10% return, this year you get $11 dollars back.
Let's say that you knew about this concept when you were 15 while you were working a crappy job at Mcdonalds (low income) if you worked just 3 shifts a week for most weeks of the year, you would end up working roughly 150 shifts (all pretty achievable). Now if you were to take $15 dollars from every shift and place that into a savings fund, you would have a total of $2250 at the end of that year. If you invested that at an average 9% over the 10 year period (in an S&P 500 for example) you will accumulate $36,556 and 6 cents (because of every cent counts).
If you stop investing in this account after 10 years, not touching it at all; over the course of a 45 year period, your money will have inflated to over $2,000,000 dollars!
And that's not to say you cant invest larger amounts, over longer periods or for higher returns (warren buffet has on earned a ridiculous average of around 19% annually) ! all of these factors can skyrocket your investments exponentially.
But pay attention to the graph and the increase in value, notice that it has a steep asymmetrical increase on the side representing the last years of the investment;
this means that the majority of the wealth was created in the last few years alone. In fact, 59% of the money was earned within the last 10 years of investment; meaning that the 35 years before that accumulated to only $834,000,
but the final 10 years alone created a whole $1,223,000 dollars.
I will be including a complete list of the annual investment amounts required over a 10 year period for every age bracket up until 45, accounting for a 9% annual return on investment and a withdrawal of investment amount at the age of 80 years old.
This is just one of the strategies that I personally am and will be following in the future, as a foundational back-up investment.
You can thank me when you’re a multimillionaire, but also don't forget to comment your thoughts on the compounding process and subscribe to the channel as we attempt to grow.
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