Is It Possible to Turn $100 into $2 Million?
- Comments: 4
Today, I attended a class as a part of my continuing education at JP Morgan Chase. The subject of the class was investments and retirement planning. One of the presenters was the national sales representative for JP Morgan Funds. I was flat out amazed at not only what he told us but also his presentation. He was both electric and informative.
At one point in the presentation, he covered the financial ups and downs of the US economy, markets, and the corresponding presidents. The US economy has definitely had its good times and bad times. After he drew out this timeline, he asked our class if we knew how much $100 would be worth today, if we had invested it in the market, and recieved around 9% interest every year tax deferred. Of course, no one came close to the correct answer. It was astonishing - the answer was over $2 million dollars!
At an average return of 9% over the course of eighty years, because of compound interest, you would be a millionaire with an initial investment of just $100 dollars. It sounds unbelievable. However, he showed us the math, we checked it and it was correct.
Think of the implications this has. I wish that I could have him present this information to all the young people in the world and all the other people out there who have not started saving, let alone started planning for retirement. It takes discipline and dedication to save for retirement. However, the younger someone starts the more time he/she has to accumulate wealth and the smaller amount the initial contribitions has to be.
There are alway going to be fluctuations in the market. Meaning, the stock market will go through periods of both ups and downs. This is guranteed. It is also a sure thing that the market over time is going to go up. We should all be investing for the long-term.
The national sales representative also explained another important concept when investing: He said, “It is always a good time to invest money into the market.” This is because over time, the market will always increase as a whole. The representative was referring to investing in a balanced portfolio that is fully diversified. Diversification is a crucial topic that I will save for a later post.
Please take this information to heart. Do yourself, your family, and the rest of us a huge favor and take control of your finances!
The power of compound interest. A great habit to start early and you can see why.
The sad thing is that so many people hear statistics like this and are amazed by it, but they still do absolutely nothing about it.
Would you mind showing us the math for that? Finance isnt exactly my strong point but i did a basic future value calculation of the 100 at that rate and i got nowhere near 2 million? Am i missing a key point/assumption here?
The actual computation involves inflation as well as the compound intrest, assuming a 9% rate of return.