Answers to
Practical Questions
You are young. Do you know how to turn $10,000 into more than $500,000?
First, you need to agree you can’t touch the $10,000 for a very long time – best to forget about it!
Remember the saying, "You are young, it’s not your fault"? Well now here's where you get even!!! You have time on your side!!
Look what happens to a single, one-time investment of $10,000 that is invested in an all-equity, diversified portfolio:
If you are 18 to 20, you have about 50 years of investing time.
If you are in your 20s, you have about 40 years of investing time.
If you are in your 30s, you have about 30 years of investing time.
If you are in your 40s, you have about 20 years of investing time.
If you are in your 50s, 60s or older, I will use a larger font. TheAnswerIs HERE.
With an investment horizon of 20 to 50 years
you can afford to take on the risk of a diversified, all-equity portfolio with this single $10,000. Remember, nothing stops you from savings or investing more money in the future.
So let's see what happens to your single, solitary, one-time investment of $10,000 over 20 to 50 years, at returns between 6 and 10%
| You are < 20 (i.e: you have 50 years to invest) your $10,000 turns into: |
In your 20s (i.e: you have 40 years to invest) your $10,000 turns into: |
In your 30s (i.e: you have 30 years to invest) your $10,000 turns into: |
In your 40s (i.e: you have 20 years to invest) your $10,000 turns into: |
||
|---|---|---|---|---|---|
| EASY PEASEY | 6% | $184,202 | $102,857 | $57,435 | $32,071 |
| 7% | $294,570 | $149,745 | $76,123 | $38,697 | |
| MOST ADVISORS’ TARGETS | 8% | $469,016 | $217,245 | $100,627 | $46,610 |
| 9% | $743,575 | $314,094 | $132,676 | $56,044 | |
| DOABLE (if you don’t pay advisor fees) |
10% | $1,173,908 | $452,593 | $174,494 | $67,275 |
Wowsa! – $10,000 can turn into that much??!!! I wish I was young, even if it was my fault!
Note the power of youth. The younger you are, the longer you can be invested. Note the big difference between starting in your 20s versus your 30s!
The key here is to start early
and let the power of equities, time and, according to Einstein, "mankind's greatest discovery": compounding, do their magic.
For the record, the average investment return, including capital plus dividends, achieved via the TSX over the past 58 years has been a little less than 9%. See other historical returns on Investment Piece #8 to learn the irrefutable long-term returns that are achieved by investing in stocks vs bonds.
"Twenty years from now you will be more disappointed by the things that you didn’t do than by the ones you did do." – Mark Twain
"A journey of a thousand miles must begin with a single step." – Lao Tzu