$50/mo to $1,300,000 (Carlson)
May 6th, 2008 | Published in Finances, Life, Quotes | 3 Comments
I wish someone would have convinced me of this at 15. Or 20.
Even investing $50 per month, and never increasing the amount can give you a seven-figure portfolio. You just have to start early. A fifteen-year-old who invests $50 per month until age sixty-five, or a total of $30,000, will have an investment portfolio of more than $1.3 million (assuming an average annual return of 11 percent). While that may not be much help to you given your age, I’m sure you know a teenager who would benefit from this knowledge.
—Charles Carlson, Eight Steps to Seven Figures (Currency; 2000), p. 169.
May 6th, 2008 at 9:30 am (#)
(assuming an average annual return of 11 percent)
But can you really count on 11% annually? That may have been possible at one time but it seems that today it’s pretty unlikely that you can sustain an 11% annual return (at a time when the “safe” options are offering 4% or 5%).
May 6th, 2008 at 10:01 am (#)
Hi Tim,
That’s actually the historical average for index stock returns. Some years it is 50%, others it is -20% and it averages all out. I think 11% can be counted on until there is some evidence things have changed. This year it’s been down a bit, but it’s not bad at all compared to many of the recessions in even recent history.
May 16th, 2008 at 8:27 pm (#)
I see a couple flaws in the theory. First and most important, all that money would be invested in profit-driven corporations that are exploiting our communities and ruining our country. What’s the cost of all that damage? If we could learn how to subtract, we might realize that we’re not coming out the least bit ahead, let alone becoming rich. Secondly, I think there’s pretty good reason to think that the 11% historical average is changing. It’s the law of decreasing marginal returns. As corporate investments extend more and more to the masses of “consumer society” each additional dollar invested is going to return less. This will be dramatically exaggerated should Social Security dollars ever start flowing to Wall Street as Bush wanted to do or as a part of any other plan.