How to send your kid to the moon by drinking less beer (part 2)

Erik Sundström By Erik Sundström, 14th May 2012 | Follow this author | RSS Feed
Posted in Wikinut>Travel>Other

This is a series of articles on how to shoot your kid into space by drinking less beer!

It does not work like that!

Yes you are right, you can not say that you will get a gauranteed 11 percent winning on the stockmarket. Especially not in these days!

But if you keep your money there and don't panic when the market fluctuates, and keep them spread over many different stocks to reduce risk, in the end you WILL keep making a profit. And it's easy to not panic and sell the stock, because you don't NEED the money (not yet!) since you stick with your nightly-walks-instead-of-cab-rides and water at the pub!

How do you think Warren Buffet managed to stay rich in spite of all the crashes? He just keep running, sometimes uphill and sometimes downhill, but if you run far enough statistics will be your friend.

Of course there is no GUARANTEE that the stockmarket will continue to grow for another 80 years just because it has been for 80 years. Or even exist in 80 years from now! When the killer flu hits or the martian attacks they might as well just wipe out Wall Street (but hey, that would be a good time to be on the moon!)

But it is likely that is still exists, and keeps growing. Very likely even, so we stick with it for the discussion. (And if it all breaks down and you loose all your money, it was anyway money you never needed! Anyway, for all those fancy pictures from the moon there's always photoshop!)

So, after 2 years you sit with 5621 dollar. Still not enough for a ticket. Well, keep saving.

After 25 years, you sit with 318.116 dollars. And 24 cents.
"Coool!! Let's go and get that Ferrarri!" Nope, stick with the plan, keep the money invested. That year you will make a good 35.000 dollar on increased value alone!

By now the intrest start being a big player, much bigger than the 200 dollar you add to your account every month. But hey, it's always good to have a water down at the pub and a brisk walk, so stick with your healthy lifestile... ;)

But 300 thousand is still far from a 100 million. It's not even 1% of the ticket, and you have been saving for 25 years!!
"This will never work, for the rest 99% of the ticket i have to save 99 times 25 years, that's several millenias!"

Nope, because of the effect of intrest upon intrest you will get your first million dollars already in the 36th year.

And while it took you 36 years to save up your first million, it will only take you 6 years to save up the second.

And a measly 10 years after the second, you are up to 6.5 million. NOW we're getting somewhere!

After the 56th year of saving, the increased value to your stock portfolio will be over a million dollar EVERY YEAR. Plus of course the 200 dollar you keep saving every month! Imagine how many new streets you will have seen together with your friend by now!

In part 3 you can read about how long time it will really take to get those 100 millions!

Tags

Intrests, Investing, Saving Money, Space, Space Travel, The Moon

Meet the author

author avatar Erik Sundström
A jack-of-all-trades with a winding path of life. I am intrested in philosophy, personal development, and addiction, so i will write about these topics and all other things that floats through my head

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