We are all looking for easy ways to accomplish useful things. Well here is a way to be a millionaire without winning a lottery.
Take $1,000, invest it at 5% and wait 141 years and 7 months. Only 73 years if you can get 10%.
If you have only $100 you can get there in a little less than 189 years at 5% and 97 years at 10%
If you are in a high tax bracket, 5% is what is left over after taxes are paid on 10%
The important lessons here:
People are not good at intuitively understanding compound interest. Do the arithmetic when faced with anything involving yield and time.
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Contact: firstname.lastname@example.org | Follow Twitter @DonShaughnessy
Don Shaughnessy is a retired partner in an international public accounting firm and is presently with The Protectors Group, a large personal insurance, employee benefits and investment agency in Peterborough Ontario.
Howard Hughes turned $400,000 into $2,000,000,000 in 53 years.
What is his average compound rate of return?