Here is an example of the growth of money. We have elected to include 14% not because it is suggested that you should earn this rate over a long period of time, but because it is possible. If the Mid-cap 400 index continues to perform better than the S&P 500, 14% may be a real number for you.

See the money growth (ROI) chart below.

The Growth of just $1.00 invested and nothing more added, shown with various returns on your investment

This is not $1.00 each month or even $1.00 each year, but one dollar invested, period.

Note several things:
• At 40 years, each additional 2% doubled your money
• At 60 years, each additional 2% tripled your money
• At 80 years, each additional 2% made four times the money

Why do we bother even showing 80 years? If you were to put some money into the right kind of fund for your young child, each and every dollar will turn into a substantial amount. As pointed out in the introduction, millions of Americans are now commonly living beyond their 80’s, and of the children born today, over 3 million will live beyond 100 years old.

The rest of our examples will be based on the conservative 12%. If you follow the plan and achieve a better return, your money will grow faster, and to bigger numbers.

If you were to invest $1,000 this year (about $2.74 a day) and not add anything more, this is what that $1,000 would grow to, if earning an average 12% per year.

Remember the lesson from the last page, 14% would grow to much, much more.

Earning an average annual return of 12%

Why was $3.40 chosen? A recent survey showed that workers with an average age of 28.5 are opening their first 401(k) or IRA accounts. Most 401(k) plans will not offer a mid-cap index fund but do offer an S&P 500 index choice, which will limit these investments to about a 12% annual average return (long term). This $3.40 per day savings will still yield a retirement of $1,000,000, but why not save a little more and make up for inflation while you are at it!

The misguided ones who sock their $3.40 per day savings into a bank’s CD for 40 years, earning maybe 5%, will earn $155,654 (about 3x the $49,640 actually saved). But that is $1,016,084 less than would be earned at a 12% rate over the same 40 years.

Banks don’t want you to know this. The savings bank “investor” is throwing away $1,000,000! I hope that this concept is crystal clear: investing in a way that will give you a long-term return of over 10% per year, will make you a millionaire.

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