I am sure you have probably read about power of compound interest. And how if you invested $10,000 at 10% return and let it compound for 50 years you would have a little over 1 million dollars.
Now that’s all well and good, but who wants to wait around for 50 years before they can enjoy fruits of their labor.
A quick tweak of spreadsheet tells us that if you could increase your returns to just 15% per year, we would be looking at a million dollar balance in around 35 years, which would also be bringing you in around $150,000 more each year after that.
25% return per year will turn your $10,000 into 1 million in around 22 years, producing another $250,000 per year in additional cash flow.
This brings us to an important point. How much is enough?
How much money do you need to live your life?
Well, its all relative to lifestyle you wish to lead. A good way to work out how much is enough, is to consider how much money you live off now. Work out how much money you would need to earn to replace your current income with your investment income.
If you earn $50,000 per year, then it will only take you around 15 years from example above at 25% return to replace your income from your investments.