TSI #21: Become a millionaire with $1 per day
Nov 13, 2022
Hello Stoic Investors,
Today I want to focus on how you can use $1 to massively impact your net worth.
It is commonly believed that you need a lot of money to reach the millionaire status. Some even joke about this.
“The simple way to get a million dollars is to inherit it.” That may work but in reality, if you are gifted a lot of money, you are probably not equipped to keep it. Just like most celebrities that end up broke.
So, let us focus on how you can make a million dollars with only $1 per day. That’s less than you spend on coffee.
I know this might seem a bit strange. If you factor in $365 per year and multiply it by 60 years, you’d only get $21,900. That’s no where near a million dollars.
However, you are forgetting one key thing. Compound interest. Compound interest is when you earn interest on both the money you've saved and the interest you earn. It might seem neglectable but when you factor in the many years, the results are astonishing.
Even the world’s greatest investor Warren Buffett has a quote for this: “My wealth has come from a combination of living in America, some lucky genes, and compound interest.”
Or maybe this one will convince you. By Albert Einstein: “Compound interest is the eighth wonder of the world. He who understands it, earns it; he who doesn't, pays it”.
Now that we have a solid understanding of how important it is, let’s look at the numbers.
If you invest $1 every day (meaning $30 per month) into a simple S&P 500 index fund for 60 years, your total contributions would be $21,900. Your portfolio, however, would grow into a massive $1,037,609 cash pile. Assuming a 10% annual return.
Pro tip: Automate your investments to make the process smoother. Read my previous article to learn how.
I know what you’re thinking right now. Why should I even bother. I’ll be too old to enjoy this money by then. Well, you can get there much faster by investing more than $1 per day.
If you invest $2 per day you’ll only need 52 years to get to a million dollars. If you invest $3, you’ll need 48 years. And so on.
Furthermore, I believe its worth “spending” $21,900 to ensure financial stability for your children and grandchildren.
That’s how generational wealth is built. It starts with a single smart individual. Will that be you?
So, note down these points and start investing today:
- $1 per day is enough to ensure financial stability
- No sum is too small to get started
- Compound interest will make you a million dollars
