How Investing Today Could Make You $100,000 in One Year

Investing Could Make You 100k

People say investing is scary or overwhelming, but I say what’s really scary is NOT investing.

The longer we put off investing, the less money we are actually making (and I’m not talking about trading time for money, this is your money making you money).

Let’s talk about making your money make money for you because who doesn’t want to have their money making money??

There’s something called compound interest. Sound boring? Well, I’m here to tell you it’s not boring at all because it’s what makes your money make money for you (without you doing a single thing!).

What is compound interest?

Compound interest is the addition of interest to your principal amount, or in other words, interest on interest.

It is the result of reinvesting your interest earned, rather than taking that money out, so interest in the next period is then earned on the principal amount plus previously-accumulated interest.

How does compound interest work?

Example time!

Let’s say you invest $1,000 in something that average a 5% return.

After one year, you’ve earned $50 in interest.

For the 2nd year, you’ll earn 5% not just on your original $1,000 investment, but on the $50 too, for a total of $1,102.50!

You’re earning interest on interest!

The more you have in your investment account, the more you’ll continue to earn over time because you’ll continue to earn interest on more and more interest.

Why is this important to you?

I’ll tell you why. The sooner you start investing your money the more you’ll be able to earn because you’ll have a longer time period to keep your money invested.

Don’t worry if you feel like you should have started sooner, we’ve all thought that and what really matters is that we take action NOW. Today, so we don’t continue to regret not starting sooner.

Let’s look at another example:

Let’s say you’ve been too scared to invest your money for way too long and now you have $70,000 sitting in your bank savings account.

You have a great job and would be able to add $2,000 a month to your investment account.

You found an investment that has the potential to earn a 10% return and decide to take the plunge!

You put your $70,000 in and start contributing your $2,000 a month for just one year.

By the end of the year, you’ll have just over $100,000 in your account (thanks to compound interest). You’ll have made over $8,000 by just putting your money into your investment account.

Here’s the visual for you:

make 100k in 1 year_1

 

I know that’s probably not the likely story for most of us (what?!, we don’t all have an extra $70,000 lying around…okay, maybe you do….), but it gets the point across.

We start investing and we can have our money making money.

Here’s maybe a more likely scenario and you can see how the interest (the green color) continues to increase drastically over time.

Let’s say you have $5,000 sitting in your savings account and you’re able to invest $200 per month (we’ll leave the same rate of return) and you don’t want to pull the money out until you retire, in 30 years. Let’s take a looksee…

 

make 100k in 1 year_2

Wowsers!! Over that 30 year time period we only put in a total of $72,000 and we made over $474,000 just from compound interest!!!

Our total balance being over $550,000! I like the looks of that.

About 84% of our ending balance came from compound interest.

Making your money do the work, that’s how I like it.

You see how powerful compound interest is now?

So you’re probably wondering, well that looks awesome Tiffany, but how do I get started investing? So glad you asked. You can check out my course, Stock Market Investing Made Simple right here.

Have you already started investing? I’d love to hear in the comments below! (And if you haven’t, I’d love to hear WHEN you’re going to start investing!)

3 Comments

Leave A Response

* Denotes Required Field