I think almost everyone out there has a dream of one day becoming a millionaire. What if this is your dream, but you don't have much money? Fear not. The cool thing about becoming a millionaire is that it's not as hard as you might think. It does require overcoming some challenges.
And it'll take time. Building real, sustainable wealth doesn't happen overnight. But the behavioral traits you build on your way to getting there will stay with you forever, and they'll help you to stay wealthy. Two of those traits are consistency and patience. And I'm going to show you how applying them in a very simple and straightforward way can allow you to turn just $100/month into $1 million.
So how can $100/month possibly turn into $1 million? Well, it's not as hard as you might think. Investing $100 per month consistently, month in and month out, for years of your life can turn into $1 million. But you'll need to be patient enough to let the process of compounding do its magic for you. Compound interest is interest on top of interest. It's where old money makes new money, and then that new money makes more new money. It's as if money is cloning itself, creating an army of money for you.
I'm assuming you'll be starting with $0. You'll invest $100/month consistently, month in and month out, for years of your life. And I'm assuming a compound annual rate of return of 10%, which is in line with the long-term average of the US stock market.
Yet, over the course of 46 years, that $100/month compounding at 10% per year adds up to... drumroll, please... 1,045,169.82.
Of course, this would allow someone in their late teens to early 20s easily become a millionaire by the time they retire, without really putting in much effort at all. They would simply need to consistently invest that $100/month and remain patient while the process plays out. If you're a little older, you'll need to retire a little later to still end up with that $1 million off of $100/month. This is why it's so important to start investing early in life.
Getting back to Einstein's point, $100/month over 46 years adds up to only $55,200 in invested capital. That means 95% of your ending value of $1 million was the result of compounding.
We're regularly putting out videos on high-quality dividend growth stocks with dividend growth investing strategy. These stocks represent equity in world-class enterprises that pay reliable, rising cash dividends to their shareholders.
And those reliable, rising profits are being generated because these businesses are providing the products and/or services the world demands. Many high-quality dividend growth stocks have done better than the market's 10% compound annual rate of return over the long run.
Think stocks like Apple Inc. - stock ticker AAPL, Lockheed Martin Corporation - stock ticker LMT, and Nike Inc. - stock ticker NKE. These are three examples of many. And it's not just outperformance we're talking about. Many of these high-quality dividend growth stocks also pay out market-beating dividends, which means you could one day live off of totally passive dividend income rather than having to slowly sell off your assets. What's better than becoming a millionaire? Staying a millionaire.
Video Length: 00:07:28
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