Some of this is a repeat or continuation from some tips previously posted, but today's tip focuses on the power of compound interest coupled with a consistent and persistent investment plan.
For those of you who missed my original example surrounding Christopher Columbus and his $0.01 investment in 1492...... That $.01 invested for 525+ years at 8% would yield $4.4 Quadrillion. All from 1 penny.
I know you don't have 500+ years to wait for that kind of growth, but we can all start making investments toward our financial future.
What if you could scrounge up $100 each month and begin investing it in a total market index fund (easy button) for the next 5 years. How much would it be worth? Let's just assume 8% market return..
5 yrs - $ 7,348
10 yrs - $18,294
15 yrs - $34,604
20 yrs - $58,902
That was only $100 per month. Most of us squander that much on fast food, coffee, cable TV/streaming subscriptions, snuff, beer (blasphemy?) and any other number of things that we could easily sacrifice.
What if we got real intentional and put together $500 each month and began investing that amount in the same total market index funds?
5 yrs - $ 36,738
10 yrs - $ 91,473
15 yrs - $173,019
20 yrs - $294,510
Now you are starting to see some REAL and IMPACTFUL dollar amounts in those investments accounts. $6,000 per year is not an inconsequential amount, but I suspect most of us could find a way to work a few extra shifts, split a few extra cords of wood, do without a new "something" for a little bit of time or scale back in some form or fashion.
What if you took your next pay raise and dedicated 100% of it to savings? What if you just added 1% more to your 401K plan?
Another critical component of this example is the behavior of consistently investing every month. It took us several years of trying to invest every month before we made it a whole year without finding an excuse to cancel that automatic investment one month. Now, after building our savings accounts, paying off debt and budgeting every month, it is going to take one hell of an emergency to cause us to cancel that automatic monthly investment.
For those of you who might consider leaving a legacy. What if you wanted to leave a true legacy to your future family members and forever change your family tree? Could you take $10,000 and invest it today and forget about it for 100 years? How much $$ could that be? -------------------------------------------> $22 Million
Start early and stick with it, the results will be phenominal.
For those of you who missed my original example surrounding Christopher Columbus and his $0.01 investment in 1492...... That $.01 invested for 525+ years at 8% would yield $4.4 Quadrillion. All from 1 penny.
I know you don't have 500+ years to wait for that kind of growth, but we can all start making investments toward our financial future.
What if you could scrounge up $100 each month and begin investing it in a total market index fund (easy button) for the next 5 years. How much would it be worth? Let's just assume 8% market return..
5 yrs - $ 7,348
10 yrs - $18,294
15 yrs - $34,604
20 yrs - $58,902
That was only $100 per month. Most of us squander that much on fast food, coffee, cable TV/streaming subscriptions, snuff, beer (blasphemy?) and any other number of things that we could easily sacrifice.
What if we got real intentional and put together $500 each month and began investing that amount in the same total market index funds?
5 yrs - $ 36,738
10 yrs - $ 91,473
15 yrs - $173,019
20 yrs - $294,510
Now you are starting to see some REAL and IMPACTFUL dollar amounts in those investments accounts. $6,000 per year is not an inconsequential amount, but I suspect most of us could find a way to work a few extra shifts, split a few extra cords of wood, do without a new "something" for a little bit of time or scale back in some form or fashion.
What if you took your next pay raise and dedicated 100% of it to savings? What if you just added 1% more to your 401K plan?
Another critical component of this example is the behavior of consistently investing every month. It took us several years of trying to invest every month before we made it a whole year without finding an excuse to cancel that automatic investment one month. Now, after building our savings accounts, paying off debt and budgeting every month, it is going to take one hell of an emergency to cause us to cancel that automatic monthly investment.
For those of you who might consider leaving a legacy. What if you wanted to leave a true legacy to your future family members and forever change your family tree? Could you take $10,000 and invest it today and forget about it for 100 years? How much $$ could that be? -------------------------------------------> $22 Million
Start early and stick with it, the results will be phenominal.
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