Do you want to make a million dollars?
Are you a person who uses the computer, watches television, and thinks about why stock markets go up and down? If so, you are probably in a perfect position to capitalize on market changes, using very simple investment information and inexpensive market access. And it does not matter if you are planning to retire soon, are retired, very young just starting out or somewhere in between. Your age is an advantage in all of these situations.
That sounds unbelievable, but it is true. Someone who is 20 years old can do very small things today, like setting aside $ 5 per week, and it can build into something very significant over time. Someone who is retired, can follow different markets, look at free expert market analysis and make market decisions all the time. A couple who have decades before they retire can make simple investing rules and watch their nest egg build so at retirement age or earlier, they can do really fantastic things.
Start with a young family just putting together their first budget. How can a couple save for retirement (or other reason for one million dollars) while maintaining a good home for their family? Most people can save a small amount, say $ 25 per week. If a couple does this consistently and intends that money in a place that will realize investment income, a rather large sum can be achieved. Of course the risk and number of years are all part of the variables that determine how successful an investment strategy will be.
Doing a little simple arithmetic, each spouse saving $ 25 per week comes to $ 2,600 in a year's time. If that money is invested at 15%, and there is evidence that rate or higher is within reach, it will grow into an astounding sum. After 2 years, the total investment becomes $ 5,590. After 3 years, it grows to $ 9,028.50. Projecting the same small weekly amount, year after year, all at 15%, here is the sum's potential: 4 years- $ 12,982, 5 years- $ 17,530, 6 years- $ 22,759, 7 years- $ 28,773, 8 years- $ 35,897, 9years- US $ 89,314, 14 years- $ 105,312, 15 years- $ 123,709, 16 years- $ 144,865, 17 years- $ 169,195, 18 years- $ 194,795, $ 226,360, 20 years- $ 262,914, 21 years- $ 304,951, 22 years- $ 353,294, 23 years- $ 408,888, 24 years- $ 472,822, 25 years- $ 546,345, 26 years- $ 630,897, 27 years- $ 728,132 28 years- $ 839,951, 29 years- $ 968,544 , 30 years- $ 1,116,426.
Now 30 years is a long time, and for many, if they are 45 years old or older, it might be a little beyond their planning capacity. However, a closer look and other information presented further in this writing, shows ways to achieve that million in a lesser time period. But notice, how around the 20 year mark, the annual fund growth reaches over $ 50,000 per year with just $ 2,600 added and the rest is pure previous years investment working on its own.
Another encouraging fact is most people will also be able to contribute even more as they mature. A $ 25 per week starter fund if increased $ 5 per week after each year grows more quickly, which would be obvious. But note the rate of change compared to the first example. After 21 years, the fund growth would be near $ 100,000 per year and that is with each partner contributing $ 125 per week.
Do the same arithmetic above only changing the contribution up $ 5 per week, each partner, each year, the fund numbers would look like this: 2 years- $ 6,110, 3yrs- $ 10,666, 4 yrs- $ 16,426, 5 years- $ 23,570, 6 yrs- $ 32,306, 7 yrs- $ 42,871, 8 yrs- $ 55,542, 9 yrs- $ 72,855, -10 yrs- $ 91,064, 11 yrs- $ 112,523, 12 yrs- $ 137,722, 13 yrs- $ 167,220, 14 yrs- $ 201,663, 15 yrs- $ 241,793,16 yrs- $ 288,462, 17 yrs- $ 342,651, 18 yrs- $ 405,489, 19 yrs- $ 478,272, 20 yrs- $ 562,493, 21 yrs- $ 659,867, 22 yrs- $ 772,368, 23 yrs- $ 902,263, 24 yrs- $ 1,052,162. Or you would surpass the goal of one million 6 years earlier. Fund contributions climb all the way to $ 130 per person per week after 22 years, but for most of the time, the contribution would be below $ 80 per week. That is a small number when compared to adding 5 years of youth onto a retirement age.
Many believe a 15%, per year gain is hard to realize but consider that a 10 year investment in many stocks attain growth beyond 400% in ten years, which is about the amount a 15% per gain would reach in 10 years time. In fact, some investments crush the 15% gain rate. Apple (3,631%), Google (476% in 6.5 yrs), Netflix (2,628%) are excellent examples. Or take McDonald's, a stock not overly glamorous but one that provides a divide and modest growth. An investment there would increase in value about 318% in 10 years time reinvesting the dividend income into the stock itself and because it is so safe another investment could be used to increase the average gain.
And here is the important part. First off, diversify. Place investments into different stocks that will be affected differently by all of the various market forces. Secondly, gain the immunity amount of free, or relatively free investing advice that is available. Thirdly, do not just put money into something and wait 30 years. Be aware of market forces, market changes and take advantage all of the time. Investing can be done several ways including short sales or making money when stocks are falling.
Because hedges, short sales, commodities, taxes, bonds are all something worth considering but add complications, this discussion is only about realizing gain from profitable stocks that issue dividends. And dividends are one complexity that needs an understanding. Stocks do come with cash dividends often and those disputes need to be invested as well as anything and calculated into investing strategy.
Going back to the first 2 examples of investing and using a huge number like the Apple / McDonald's average (AMA), the numbers would be incredibly different. The simple $ 25 per person of a couple per week could see $ 100,000 or more after only 6 years and over the one million mark after 11 years, all only if one averaged the same rate of increase the fast growing stocks have shown.
How can anyone get those types of returns without relying on pure luck? Today, stock or other investing can be done at a low trading cost and most companies doing that include include quit a bit of information.
It is time to trade because you can do it for so little cost at; Scottrade, Tdameritrade, Schwab, Tdwaterhouse, Fidelity, Tradeking Thinkorswim, Etrade, (you get the idea.) Plus many others.
Regardless of how one invests in the markets, first get as much information as needed to do wise investing. That information can easily be had at CNBC or "The Street", or Barons or Bloomberg Financials, just naming basically free information. There are thousands of other sources. Even the large investing firms will sometimes let their recommendations be known.
What was once just reserved for those that could afford a ticker tape, followed by the printed "Wall Street Journal" is now on a live, computer load of information. The Street, with Jim Cramer, a separate business internet news forum, separate from the show he does on CNBC, is a pay for access web site that is constantly supplying the latest in stock trading advice.
Also, CNBC brings guests onto its show daily who represent many financial institutions and they give their stock picks with the reasons why they are such a wise choice.
In addition, Google has news services in many categories. Their search engine scans several articles, separates them into areas of interest, including business, and allows anyone to request a specific idea or subject.
Searching "Forecast" in the business section, instantly gives out 30,000 articles. A recent search thrust Whole Foods into the headlines with next years sales increase based on the facts that the wealthy are starting to spend more and America is becoming more concerned about eating healthy. The stock is projected to earn more than its previous target and has doubled in the past twelve months.
On the CNBC show hosted by Jim Cramer, he featured three stocks, Core labs, Pitney Bowes and Liberty property Trust in just one show. And in the past, his programs have discussed in detail what is necessary to be diversified.
If someone saves a little money each week, admits it with vigor knowing what experts recommend, huge growth will be realized, plus it will make afternoons at the coffee house more interesting.